Dris proposal for national licensing of the plumbing and gasfitting occupations

Options considered

The following provides a summary of the four main options considered:

Option 1: National licensing – ‘Three tier’ option. Under this option a contractor, a (full) licence holder and a registered tradesperson would require a licence to undertake specified categories of work and the broad scope of work undertaken by a licence holder would be the same. The difference between the two sub-options is the number of Certificate IV units needed to be eligible to hold the (full) licence.

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  Sub-option 1: This approach requires an overall increase in the number of Certificate IV units of competency required for new (full) licence holders, compared with current practice, depending on the licence category chosen.
  
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  Sub-option 2: This approach requires a smaller overall number of Certificate IV units of competency for new (full) licence holders compared with sub-option 1. This would approximate the status quo for most jurisdictions, compared with current practice. It would represent an increase or decrease in units for some jurisdictions.
  

Option 2: National licensing – ‘Two tier’ option. Under this option, there would be no ‘supervised’/registered tradesperson level of licence, and upon completion of a Certificate III, licence holders could work unsupervised.

Option 3: Automatic mutual recognition. Under this option:

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  Mutual recognition arrangements would be enhanced so that licensees would no longer have to apply for a licence in multiple jurisdictions.
  
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  Each jurisdiction would continue to issue licences against existing jurisdictional categories and associated scopes of work but with these licences being recognised by all states and territories without the licensee having to reapply for a licence or pay an additional fee. Recognition could be restricted to those licences where equivalency has been declared.
  
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  There would be opportunity over time to move towards a ‘harmonised set of categories’ or for jurisdictions to deregulate areas identified as unnecessary.
  

Option 4: Status quo. Under this option, there would be no changes to existing licensing and mutual recognition arrangements. This option has not been costed.

Preferred option

The national licensing three tier, sub-option 2 is the preferred option in this Decision RIS. On balance, it represents the highest net benefit to the community, taking both qualitative and quantitative impacts into account, when compared against the other options considered.

Determining the highest net benefit to the community involves a balancing of factors, such as (but not limited to) appropriate levels of safety for consumers and reduced costs for businesses and/or licensees.

Overview of alternative options to national licensing

Two alternative options to national licensing were noted in the Consultation RIS: automatic mutual recognition and the status quo.

Automatic Mutual Recognition

The 2009 Decision Regulation Impact Statement on the National Licensing System for Specific Occupations outlined two possible approaches to an automatic mutual recognition (driver’s licence model) – unharmonised and harmonised. In the first, licences would remain unharmonised; that is, skills, non-skills and administrative requirements would not be harmonised, and each jurisdiction would continue to implement their existing arrangements. A licensee able to perform the work regulated in one jurisdiction would be able to perform that work in any other jurisdiction without an additional licence. In the second, jurisdictions would seek to harmonise the aspects of licensing so that requirements across the country are the same.

Automatic mutual recognition would provide some benefits but is highly unlikely to deliver the same level of benefits as national licensing. As highlighted in this RIS, the current licensing arrangements across the states and territories are not harmonised and vary in terms of license categories, qualification requirements, and scopes of work. These variations between jurisdictions result in the restriction of workforce mobility, particularly in regional areas close to state borders and add increased costs to business and ultimately consumers.

Under either model, an occupational licence issued by any jurisdiction would be valid in any state or territory in Australia, therefore improved national labour mobility would be achieved and the regulatory burden could be expected to be reduced. State and territory autonomy would be maintained and transition and implementation costs would be minimised. Jurisdictions would retain the legislative power to vary licensing requirements to meet circumstances arising in particular states over time.

The unharmonised approach would effectively import the complexities of each jurisdiction’s licensing system into the other jurisdictions. Regulators would need to be familiar with the scope of work covered by every jurisdiction’s licence categories in order to properly monitor work and compliance with jurisdictional requirements. Employers would also need to understand the difference licence types as, at present, mutual recognition processes ensure that licences issued in other jurisdictions are assessed and a ‘local’ licence issued so that the scope of work authorised is readily understood. The unharmonised option has the potential to increase consumer confusion, undermine the integrity of jurisdictional regulatory regimes and increase the potential for jurisdiction shopping.

Under the harmonised licence model, national mechanisms would be needed to coordinate the establishment and maintenance of the arrangements and resolve different jurisdictional views. A number of examples of past attempts to harmonise regimes have failed. Some advocates for harmonised licences have suggested that only those licences with clear equivalence could be harmonised, with others left unharmonised. For licences where no equivalence had been agreed, current mutual recognition requirements would need to continue. Such a two-tier approach would increase regulatory complexity. Difficulties are envisaged in maintaining consistency in legislative provisions without a common legislative basis. Costs would still be incurred in relation to policy development and legislative changes.

Under a harmonised automatic mutual recognition system, it is anticipated there would be a greater likelihood of resistance to reforms and therefore fewer opportunities to streamline and rationalise licensing frameworks compared with a single national licensing system which has an independent licensing authority in place whose role it is to develop and implement licensing reforms.

Difficulties are also envisaged in maintaining consistency in legislative provisions in a harmonised system without a common legislative basis. While the governance costs arising from automatic mutual recognition are less obvious than those from national licensing, they are still present and need to be considered.

Either model of automatic mutual recognition has the potential to provide for enhanced labour mobility, with lower immediate transition costs. However, the complexities of operating such a system mean that it is unlikely to achieve the same level of harmonisation and deregulation as national licensing. This would mean that the benefits would be lower. Implementation would be complex and would require close and ongoing co-operation and co-ordination at all levels of policy development, regulation setting and compliance.

Automatic mutual recognition would give rise to a more complex, less transparent, higher risk environment with less opportunity for reduced regulation and a reduced prospect for the longevity of the reform over time. Many of these costs would fall on businesses as they try to operate within an extremely complex regulatory environment.

It is estimated that neither model would provide the same level of benefit as national licensing. Automatic mutual recognition is therefore not the preferred option.

Further discussion of stakeholder views on AMR are outlined in Chapter 2. An assessment of the possible impacts is contained in Chapter 4.

Status quo

Under the status quo option, the states and territories would continue to operate their own quite different licensing systems. Licensed workers would continue to be subject to the Mutual Recognition Act 1992 when they wished to work in another state or states, and would need to apply for a licence and pay an additional fee in each state or territory in which they choose to operate if licensed in that jurisdiction. This option would not address current regulatory complexities, duplication across jurisdictions or impediments to a seamless national economy. As COAG had already requested the development of a national licensing system, the status quo could not be the preferred option unless other options delivered a net cost, when all impacts were assessed. This is not the case. The status quo is therefore simply used to measure the costs and benefits of the other options presented.