National Licensing for Property Occupations Consultation Regulation Impact Statement

Comparison of automatic mutual recognition with national licensing

1. Labour mobility

Automatic mutual recognition could achieve some of the same labour mobility benefits as national licensing, as it would enhance the ability for some labour to flow where property occupations are most needed and would reduce administrative and financial costs in the form of additional fees where licences are held across jurisdictions.

Licence categories and regulated work

While national licensing seeks to harmonise and reduce the number of categories, there is not necessarily the mechanism or compulsion under automatic recognition to make such changes. Automatic recognition retains individual jurisdictions’ licensing frameworks, while national licensing would have a central licensing authority responsible for developing national licence policy and legislation.

Conduct and compliance

Regardless of what option is adopted, licensees choosing to work in other jurisdictions outside their primary jurisdiction would still need to comply with any relevant jurisdiction-specific conduct and compliance requirements that apply to the work they intend to perform.

Relevant legislation

Under the automatic mutual recognition model, regulators would be required to be conversant with multiple jurisdictional licensing requirements for a range of occupations. However, under a national licensing, national legislation would apply to all jurisdictions that regulate a prescribed occupation.

Registers

A limited central register of disciplinary actions could be established under the automatic recognition model to enable jurisdictional regulators to be aware of any pending actions or disciplinary actions underway. Under the automatic mutual recognition model, consumers would need to search the public registers from other jurisdictions to find information on a particular licensee. However, not all jurisdictions currently have a publicly accessible register. While such a database may be significantly less sophisticated than the proposed national licensing register, and would not deliver the same level of transparency for consumers of the services or for compliance purposes, comprehensive costings would be required. Jurisdiction-based disciplinary systems may not easily interact with a central database of disciplinary actions. Without a public national licensing register, however, a disqualified or suspended license would not be apparent to compliance officers or consumers.

The proposed national licensing model would have a national licensing register with a central database accessible only to the regulator. The national licensing register would be linked to all jurisdictional IT platforms and would be continually updated, enabling regulators to be better informed of the current status of a licensee, including any disciplinary action. Consumers would be afforded a greater level of protection by being able to view a licensee’s status through the public national licensing register component of the register.

Jurisdiction shopping

Under automatic mutual recognition, ‘jurisdiction shopping’ may become more common due to differences in licensing requirements, such as lower qualification criteria, easier application processes, etc. In addition, while jurisdictions will continue to set licence fees under the proposed national licensing model, under both options jurisdiction shopping could be negated by a legislative requirement for applicants or licensees to apply for or renew a licence in the jurisdiction in which they reside.

Conclusion

National licensing, while more costly to implement than automatic mutual recognition, due to the need to establish common legislation and processes to administer and enforce it (through creation of a national authority), would create much more certainty for industry, consumers and licensees as to what licence requirements are, and what work licensees are qualified to perform.

National licensing would avoid the potential risk under automatic mutual recognition that licensees would feel compelled to obtain multiple jurisdictional licences in order to meet consumer or employer preferences. There is also a risk under automatic mutual recognition that without a central, coordinating body, gaining consensus on changes may be difficult and unravel over time. .

A potential benefit of the automatic mutual recognition option is that it may be implemented more quickly, minimising the transition costs, for some licences than under the national occupational licensing model. However, the speed of implementation would be strongly influenced by the extent of harmonisation of skills-based and non-skills-based eligibility requirements. Prioritisation could be given to applicable licence categories based on:

the commonality of the licence category (or equivalent) across jurisdictions (e.g. real estate agent)

the number of licences for the category (or equivalent) across Australia

the prevalence of cross-jurisdictional work carried out by licensees of that category.

By focusing a process that targets licensees that operate across multiple jurisdictions rather than harmonising licence categories, qualification and eligibility requirements for all licensees, of which the majority work in only one jurisdiction, an automatic mutual recognition approach is potentially a simpler, more targeted and cost-effective solution to overcome existing labour mobility barriers than national licensing. Compared to national licensing, it would require less significant legislative changes, the development of a more limited IT register of disciplinary actions on licensees, and a smaller range of administrative actions to implement. However, depending on the degree of future harmonisation efforts, some of these immediate cost savings may be eroded over time.

This option may have cost advantages over the national licensing model in the short term, in that it may:

not place the transition costs on licensees that would arise under national licensing when licensees (and those who do not cross borders in particular) are required to understand new licensing requirements, or (potentially) pay increased fees to fund the scheme (where regulators are self-funded)

avoid the need to (potentially) increase fees to fund a centralised licensing body in addition to maintaining jurisdictional regulators and regulatory regimes.

The costs and benefits of both models have yet to be fully costed. While the automatic mutual recognition model may deliver some benefits more cheaply (although increased compliance costs to governments have yet to be quantified) over the short term, there are additional the benefits from the proposed national licensing model that are likely to be realised over the longer term. Notwithstanding the cost–benefit analysis, there would appear to be overall long-term qualitative benefits in a single national system.