Dris proposal for national licensing of the plumbing and gasfitting occupations

About this Decision Regulation Impact Statement

The purpose of this Decision Regulation Impact Statement (RIS) is to recommend a preferred option for policy to underpin the establishment of a national licensing scheme for the plumbing and gasfitting occupations. This follows stakeholder comment on the Consultation RIS for national licensing for the plumbing and gasfitting occupations.

This Decision RIS identifies the nature of the problem to be solved, outlines the alternative policy options considered and explains the rationale for selecting the model proposed and the elements that comprise the model. It also assesses the costs and benefits of the preferred model compared with the other options identified.

This Decision RIS follows the guidelines of the Council of Australian Governments (COAG) in the COAG Best practice regulation Guide (2007). It has been approved for release by the Office of Best Practice Regulation.

PricewaterhouseCoopers was engaged by the COAG National Licensing Steering Committee to assist with the preparation of both the Consultation RIS and the Decision RIS.

Summary of options considered in this Decision Regulation Impact Statement Reform of licensing for the plumbing and gasfitting occupations has the potential to deliver significant ongoing benefits, most of which go to plumbers and gasfitters, businesses that use their services, and consumers. There are one-off costs under some options for reform, including costs to licensees and businesses to become aware of the proposed changes, and costs to government for the establishment of the National Occupational Licensing Authority (NOLA) and the national licensing register. There would also be ongoing costs to maintain NOLA and the register. This Decision RIS indicates that the benefits of the reform outweigh these costs. In the Consultation RIS, two approaches were considered to the way in which ‘national licensing’ could be structured. A ‘three tier’ option (involving three levels of licence: contractor, full licensee and supervised licensee). Two sub-options are possible under this approach. The first (sub-option 1) would increase competency requirements for full licence holders for the majority of jurisdictions. The second (sub-option 2) would keep competency requirements for full licence holders broadly in line with current requirements but make them consistent across jurisdictions. A ‘two-tier’ option, so called as it removes the supervised licensee level, meaning there would only be the full licence and contractor levels of licence. Under this option, upon completion of a Certificate III level qualification, a licence holder would be authorised to conduct all regulated work for that licence category, enabling them to satisfy jurisdictional administrative processes with regard to certifying or ‘signing off’ on the work undertaken. A third option, automatic mutual recognition (the ‘driver’s licence’ model) was also considered. This model would allow a plumber or gasfitter to have their current state- or territory-based licence recognised by another jurisdiction, enabling them to work in that jurisdiction without having to apply for another licence or pay an additional licence fee. This option is based on licences issued in a particular jurisdiction being accepted in all jurisdictions. A number of approaches were identified as possible: under an unharmonised model, there would be no change to existing licence categories and scopes of regulated work; under a harmonised model, jurisdictions would seek to harmonise licence categories (either according to the policy developed under national licensing or using existing ministerial declarations as a basis). A harmonised approach could also be implemented as a staged process. The overall option has not been fully developed and is therefore not fully costed. While this would allow for increased mobility of labour, with reduced transition costs compared to national licensing, the benefits likely to flow from the agreed establishment of NOLA are not guaranteed. Furthermore, without ongoing coordination and impetus to maintain and build on the initial reforms, there would be a risk that automatic mutual recognition may only provide one-off selective reductions in regulatory burdens that may be eroded over time. For these reasons, this option is not supported in the Decision RIS. The impetus for licensing reform is a desire to enhance labour mobility and remove unnecessary regulatory burdens on plumbers and gasfitters. All of the options for reform enhance labour mobility. Given this, consideration has focused on the differing licence structure and competencies required for each option, and their impact on costs, safety and consumer protection outcomes for industry and users of plumbing and gasfitting services.

Quantified impacts for the national licensing options Table 1 shows the quantified impacts for the national licensing options, that is, it measures the financial costs and benefits of each option. A decision on the preferred option depends on assessing a full range of costs and benefits, such as the impact on safety outcomes from changes to supervision requirements and competencies. While the quantified impacts suggest that the two tier option has the highest benefit, stakeholder feedback and analysis of the safety risks indicates that this option would not provide the skills necessary for a full licence holder to carry out regulated work and would therefore give rise to safety risks for workers and reduced consumer protection outcomes for users of plumbing and gasfitting services. The three tier, sub-option 1 would provide an increase in regulatory requirements when compared with the status quo. The preferred option in this Decision RIS is the three tier, sub-option 2 as it addresses worker safety and wider consumer protections, including safety, while not increasing overall regulatory requirements. A payback period is included in the table 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. Table S.1: Impacts of national licensing options National quantified impacts Two tier Three tier, sub-option 1 Three tier, sub-option 2 Ongoing net impact ($ million per annum) 90.24 38.02 52.19 Community (licensees, business, households) 92.46 40.24 54.41 Government^1 (2.22) (2.22) (2.22) One-off transition costs ($ million) (23.74) (23.74) (23.74) Community (licensees, business, households) (15.07) (15.07) (15.07) Government (8.67) (8.67) (8.67) Total 10-year NPV ($m) 566.67 226.02 318.41 Benefit-cost ratio of the total 10-year NPV 14.70 2.67 8.13 Payback period (years) 0.26 0.62 0.45 Rate of return (annualised percentage) 380% 160% 220% 10-year NPV ($m) NSW VIC QLD WA SA TAS ACT NT Two tier 118.42 112.27 128.07 145.82 29.84 11.10 14.34 6.80 Three tier, sub-option 1 93.92 40.88 55.69 20.94 10.02 3.69 0.20 0.67 Three tier, sub-option 2 100.57 60.25 75.33 54.82 15.40 5.68 4.03 2.34 NPV = net present value