National Licensing for Property Occupations Consultation Regulation Impact Statement

Direct costs and benefits of national licensing

The costs and benefits discussed in this section are the ongoing impacts that would be incurred each year throughout the operation of national licensing, beginning in the first year of operation,
2013–14. A 10-year NPV is presented in this analysis; however, these impacts are ongoing and could theoretically be considered over a longer time horizon as they will be enjoyed for many years.

While the transition costs outlined in 4.1.1 are quite discrete, many of the ongoing impacts affect several different sectors of the economy (i.e. licensees, business, households and government). For that reason, this section is presented by type of impact rather than by sector.

2. Labour mobility

Labour mobility is defined as the extent to which labour is free to move around the economy in response to opportunities in the marketplace. This movement may be the relocation of labour from one region to another, or it may be the extent to which labour is accessible on a short-term or an itinerant basis, as required by firms across the economy. In addition, labour mobility should also be considered in the context of movement of workers across state and territory border towns or regions.

A complex set of factors can influence the mobility of labour in an economy. Even when there are employment opportunities for workers across the economy, the extent to which these will be filled is influenced by:

the accessibility of information on work opportunities across regions

the costs associated with moving to a new job, or of working remotely, away from home for particular periods

the availability of infrastructure in a region, including housing, schools, child care, transport, etc. (which is particularly important for workers looking to relocate to a region)

regulatory settings that may impede the mobility of labour, either directly by prohibiting movement or indirectly by imposing cost barriers that are sufficiently high to deter movement by employees.

In making employment decisions, each individual will have a threshold cost of taking up a new employment opportunity. Such a move need not be a permanent move and could involve temporary relocation to take advantage of a market opportunity. For short relocations or temporary moves, fixed costs – such as licensing – become all the more relevant. This is the cost above which the move will not be cost effective and will not proceed. This threshold will be related to the potential future benefit for employment in a new jurisdiction (with benefits including both financial and lifestyle factors). It is reasonable to assume that this threshold cost will vary for individuals. Therefore, as costs are lowered, a greater proportion of individuals in an industry would consider moving to a new jurisdiction for employment (an additional factor in this equation is the relative wages across jurisdictions) or taking up opportunities where they arise in other jurisdictions. On this basis, there are potential benefits in seeking to drive down costs from current levels.

Understanding the linkages between labour mobility and costs suggests that reducing costs has the potential to increase this proportion. There are likely flow-on benefits of higher labour mobility across the economy, in the form of economic efficiency improvements.

For the property occupations, the realisation of labour mobility benefits may depend on the extent to which local knowledge affects a licensee’s ability to compete in another jurisdiction. While this may limit some licensees from becoming more mobile in the property market, there would still be greater opportunity to work in contiguous states and territories, generate more integrated national practices and work in jurisdictions with high demand for property services. Some jurisdictions believe that this factor is significant enough to lower the impact for property services.

The benefit from improved labour mobility is difficult to quantify. To provide an indication of the potential benefit, this Consultation RIS draws on the work undertaken in this area by the Productivity Commission. In its 2009 review, the commission found that moving from no mobility of labour (i.e. licensees are prohibited from moving interstate) to full labour mobility without restrictions could lead to a 0.3 per cent increase in real GDP. Based on real GDP in 2011, this would represent about $4 billion per annum. Taking property services to represent about 1.1 per cent of employment in the economy and assuming that national licensing would result in about 10 per cent of this benefit, this leads to a benefit to the economy of about $4.4 million per annum. For more detail on these assumptions, see section 4.3.

Using this estimate as an indication of the potential benefit under national licensing, the benefit from improved labour mobility under national licensing would be $4.43 million per annum or $29.05 million NPV over 10 years as at 1 July 2012. The distribution of this benefit has been allocated based on licence numbers and is shown in Table 4.7. For further information on the assumptions underlying these estimates, see section 4.3.

Table 4.7: Benefits from improved labour mobility under national licensing

$ million	NSW	Vic	Qld	WA	SA	Tas	ACT	NT	National
Annualised ongoing benefit	1.41	0.64	1.34	0.76	0.18	0.01	0.05	0.03	4.43
10-year NPV as at 1 July 2012	9.25	4.22	8.77	4.97	1.17	0.08	0.36	0.22	29.05

Some jurisdictions have suggested that the assumptions underlying these estimates need to be tested further. In testing these estimates, it was suggested that the following be considered:

the extent to which labour mobility is currently impeded in the property services given the potential importance of local knowledge

the expected effect of reform on rates of labour mobility given the other potential barriers that exist

whether using the employment share to apportion the benefit to property is an appropriate proxy given that an industry’s share of employment may not be the same as their share of GDP.