Dris proposal for national licensing of the plumbing and gasfitting 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 plumbing and gasfitting occupational area with a proposed national licensing approach. It also examines an automatic mutual recognition option. It considers the impact that each option would have on industry, consumers and government and is informed by stakeholder feedback on the options outlined in the Consultation RIS, which was released on 13 August 2012. It acknowledges that the status quo would be the default option.

The problem

Plumbing and gasfitting occupations are currently licensed under state and territory legislation with the approach to licensing varying significantly across the jurisdictions. New South Wales, Victoria and Queensland follow a segmented approach, with a greater range of categories that have more narrowly defined regulated work. In contrast, Western Australia, South Australia, Tasmania, the Australian Capital Territory and the Northern Territory tend to follow a general approach, with a limited number of categories and broad scopes of work. An overview of the sector and current regulatory requirements is provided at Attachment A.

The numerous approaches to licensing has led to differences in the numbers and types of licence categories available, the names of licences, the scopes of regulated work authorised by each licence and the eligibility requirements, including qualifications, needed to obtain them. These inconsistencies create a regulatory burden for businesses that operate and employ skilled people in more than one state, as they must be familiar with the requirements of the different jurisdictions. They create a regulatory burden for the nation as they impede the free movement of skilled labour across states and territories. This negative impact is particularly felt at times of skills shortage or when there is a natural disaster. One of the catalysts for work on national licensing was the aftermath of cyclone Larry in 2006, when the skilled workers from other jurisdictions were unable to respond quickly to assist in repairing the significant damage to infrastructure.

The different approaches impose a 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 another 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 regu0lator. 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 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 these multiple licences and pay the relevant fees. This acts as a deterrent to those who might otherwise take advantage of business opportunities in other states and territories. Mutual recognition does not apply to business licences unless they are held by a natural person (e.g. not a body corporate).

In addition to the burden of red tape on licensees arising 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 people².

Box ES.1: Case study of the cost to companies of meeting different licence requirements

Laser Plumbing in Tweed Heads is a company that operates on the border of New South Wales and Queensland. Its manager comments: “As Laser Plumbing contracts in Tweed Heads we need to hold a licence in both states (both for the individual and company licences) as well as a Queensland Building Services Authority licence in Queensland. In Queensland you need to have a licensed plumber on site at all times or our company will be removed from that site. Journeyman tradesmen also need to be registered in both New South Wales and Queensland. It is a major cost to the business to maintain all these licences”.

Source: Case study received from Laser Plumbing, Tweed Heads, Australia, April 2012 (supplied by the Master Plumbers Association of NSW).

Government objectives for reform

The Council of Australian Governments (COAG) has sought to increase Australia’s productivity and provide the environment for a seamless national economy. A key part of achieving this objective is to address the deficiencies in the current approach to licensing in Australia by developing a National Occupational Licensing System (national licensing) for certain occupational areas. Under this reform, national licences would be issued by a national licensing authority and would allow licensees to operate in all Australian jurisdictions, without having to apply for another licence or pay an additional fee. This would increase labour mobility and improve the efficiency of regulation.

A national licensing system would commence with the following initial occupational areas which would be introduced in two waves:

first wave: electrical; plumbing and gasfitting; property; refrigeration and air-conditioning

second wave: building and building-related occupations; valuers and conveyancers.

COAG has agreed that, under national licensing, the first wave of licences will be settled by 2013, with the second-wave occupations to follow. The national licensing system would have the capacity to extend to other licensed occupations over time and provides a platform from which further harmonisation of state-based licensing arrangements, such as conduct requirements, could be considered.

The principles on which the work has been undertaken are based on COAG’s Principles of Best Practice Regulation and are incorporated in the Intergovernmental Agreement for a National Licensing System for Specified Occupations, which was signed by all jurisdictions in April 2009. These state that licensing arrangements should be effective and proportional to that required for consumer protection, and worker and public health and safety, while ensuring economic efficiency and equity of access.