National Licensing for Property Occupations Consultation Regulation Impact Statement

About this Consultation Regulation Impact Statement

The purpose of this Consultation Regulation Impact Statement (RIS) is to seek stakeholder comment on the policy underpinning the draft legislative schema for the establishment of a national licensing system for the property occupations. The Consultation RIS also seeks stakeholder views on an automatic mutual recognition option.

In doing so, it will identify the nature of the problem to be solved, identify alternative policy options and assess the costs and benefits of these options. The Consultation RIS will seek relevant information that will assist the government decision-making processes to identify the best option for a national approach to licensing property occupations.

This Consultation RIS follows the Council of Australian Governments (COAG)’s guidelines in the Best practice regulation handbook. It has been approved for release by the Office of Best Practice Regulation and provides a valuable means through which government and other stakeholders can consider policy and regulatory options in a focused way. Stakeholder feedback will inform the content of a Decision RIS on the proposed introduction of national licensing, which will be released later in 2012.

It should be noted that a Consultation RIS is required to canvass both regulatory and non-regulatory approaches, and to include a status quo or ‘no change’ option (recognising that not all problems have a cost-effective solution through government action).

PricewaterhouseCoopers has been engaged by the COAG National Licensing Steering Committee to assist with the preparation of this Consultation RIS.

Opportunities to comment on this Consultation Regulation Impact Statement

The COAG National Licensing Steering Committee is seeking input from stakeholders and the wider public on the proposals outlined in this Consultation RIS. This Consultation RIS is subject to a minimum six-week consultation period, and the steering committee welcomes feedback on the proposed options for implementation and any other aspect of the document. The closing date for submissions to this Consultation RIS is 21 September 2012. This date may be extended; please check the national licensing website (www.nola.gov.au) for information. Attachment A contains instructions on how to provide a submission.

Summary of options canvassed in this Consultation Regulation Impact Statement National licensing National licensing for property occupations across Australia has the potential to deliver significant ongoing net benefits (see Table S.1). Most benefits of national licensing go to business, workers and consumers. There are one-off costs, 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 and the public national licensing register and its supporting database. How these costs will be covered is a matter for individual jurisdictions to determine and may, in some cases, be passed on to licensees via increased fees. This Consultation Regulatory Impact Statement indicates that the benefits of the reform outweigh these costs. In comparing the total benefits and costs across all stakeholders, it would take less than a year for the benefits of the reform to start exceeding the costs nationally, and the benefits of the reform would continue to be realised after the initial 10 years presented in this analysis. Based on an indicative modelling exercise, a range of indicators show that these reforms are worthwhile, as can be seen in Table S.1. Table S.1: Net benefits of reforms to national licensing for property occupations, by jurisdiction NSW Vic Qld WA SA Tas ACT NT Total Ongoing net impact ($m per annum) 34.13 0.75 5.79 29.49 4.92 0.51 1.34 1.81 78.73 Community (licensees, business, households) 26.76 (0.46) 3.02 22.05 3.58 0.32 0.93 1.26 80.78 Government^a 0.75 0.78 0.50 0.71 0.15 0.09 0.15 0.14 (2.05) One-off transition costs ($m) (3.04) (2.14) (2.93) (2.37) (1.01) (0.70) (0.58) (0.59) (13.35) Community (Licensees, business, households) (2.01) (0.79) (1.63) (1.20) (0.25) (0.02) (0.06) (0.06) (6.03) Government (1.04) (1.35) (1.29) (1.16) (0.75) (0.68) (0.51) (0.53) (7.33) Total 10-year NPV ($m) 218.75 2.63 34.75 189.43 30.95 2.63 8.17 11.19 498.50 – excluding NOLA 222.19 5.72 37.39 191.10 32.16 3.32 8.50 11.61 512.00 Benefit–cost ratio of the total 10 year NPV 11.26 1.10 6.29 59.12 14.44 3.65 5.15 15.50 8.76 Payback period (years) 0.09 2.85 0.51 0.08 0.20 1.38 0.43 0.33 0.17 Rate of return (annualised percentage) 1121% 35% 198% 1246% 489% 73% 232% 307% 590% NPV = net present value; NOLA = National Occupational Licensing Authority a The analysis does not account for changes in GST, payroll or other taxes. As some of the community benefits will be consumed as expenditure or enjoyed as higher wages, there will be an increase in GST and payroll revenues. Automatic mutual recognition An alternative to national licensing is automatic mutual recognition, which would enhance the ability for some labour to flow where it is most needed, with lower transitional costs than envisaged under national licensing. There is the potential for this option to capture other benefits that have been identified under national licensing. The downside of automatic mutual recognition is that the benefits that are likely to flow from the agreed establishment of the licensing authority are not guaranteed. Furthermore, without ongoing coordination and impetus to maintain and build on the initial reforms, there is a risk that automatic mutual recognition may only provide one-off selective reductions in regulatory burdens that may be eroded over time.