Over 18 months ago, the Housing Industry Association (HIA) provided a submission to the Productivity Commission concerning the proposal to adopt a mutual recognition scheme to cover state and territory occupational licensing.

This initiative was the highly diluted substitute for the failure to extract the enormous benefit that would flow by the adoption of a singular national licensing system for targeted occupations particularly in the building and construction sector.

The HIA’s submission provides a fairly succinct outline of what might be expected when a logical concept to improve and provide consistent industry standards, boost quality performance and help strengthen consumer confidence in the building industry hits the roadblock of federal and state government agencies that seem to have a default setting to find any and every reason to do nothing.

This is what the HIA had to say in its submission:

“In 2006 the Council of Australian Governments (CoAG) reached agreement to achieve full mutual recognition of skills qualifications across Australia. The intention was for there to be more effective mutual recognition of electricians, plumbers, refrigeration and air-conditioning mechanics, carpenters, joiners and bricklayers. However, during the period between 2008 and 2013, rather than enhancing mutual recognition arrangements, it appears that CoAG focused its efforts on establishing a national occupational licensing system for selected occupations, including building trades. Whilst the principle of a nationally consistent licensing system was admirable, during the harmonization process, HIA became increasingly concerned with the red tape burden that would result in the event that jurisdictions resisted any reduction in their particular regulatory objectives. In December 2013, CoAG decided to discontinue the proposed reforms and instead announced that the States would work to develop alternative options.”

So after seven years of government dithering, it should come as no surprise that the HIA – whilst considering the ‘in principle’ objective of CoAG to implement a nationally consistent licensing system to be ‘admirable’ – then went on to express concern about the potential of a ‘red tape burden’ for their members if a new nationally consistent licensing regulation was pursued.

Whoever came up with that gem has probably watched too many episodes of “Yes Minister” where one of Sir Humphrey’s backhanded compliments included the frequent use of the ‘most admirable’ descriptor. Government bureaucracies are the unchallenged experts within the field of systemic obfuscation. With that said, we must ask the obvious question: does maintaining the status quo and expanding it to include ‘mutual recognition’ actually represent a better licensing system that isn’t also drowning in a sea of mass confusion and increasing red tape anyway?

The HIA’s own submission appears to confirm this situation in stating that:

“In the meantime, there are some noticeable issues with the operation of the mutual recognition system for the residential building industry. These include:

The marked disparity in the licensing of builders and trade contractors from state to state

No two states have the same licensing or registration system, making it difficult to compare or marry up license classes. There is a marked disparity in the extent of business and occupational licensing amongst jurisdictions, with licensing of all builders and trade contractor’s mandatory in Queensland and South Australia whilst in some other jurisdiction, such as the Australian Capital Territory only residential builders are required to be licensed. For builders, there appear to be two main approaches taken by the states and territories in defining general building license categories in legislation. It should be noted that some states and territories have a combination of both approaches (e.g. South Australia). Some jurisdictions only require a license for certain kinds of building work e.g. New South Wales and Northern Territory, only require licenses for residential building (and not for commercial buildings). Some jurisdictions base license classes on the Building Code of Australia (BCA) to describe what work a license covers e.g. Queensland, Australian Capital Territory and Tasmania. Other jurisdictions align licenses to domestic/residential and/or industrial/commercial building (New South Wales, Victoria and South Australia). Western Australia issues a single open class of builder’s license which covers all work above $20,000 regardless of the type of building or the consumer/client.”

So the decision to stick with the multitude of state-based accreditations and a highly inconsistent approach to Australia’s builder licensing standards is seen as being the best option?

Surely we can develop a single, comprehensive and consistent approach to establish a standardized set of formal incremental qualifications based on the Australian Qualification Framework (AQF) outcomes. These qualifications could be linked to the issuance of various classes of a nationally recognised building licenses that correspond with different work categories to better recognise that the greater the complexity and scale of the construction project, then the greater level of skill and qualifications need to have be attained to obtain that license.

The Productivity Commission’s Issues Paper called upon submissions to address specific matters including this rather interesting one:

Is there any evidence of jurisdiction ‘shopping and hopping’ occurring for occupations which is leading to harm to property, health and safety in another jurisdiction via mutual recognition? If so, what is the extent of the problem and is it a systemic issue affecting an entire occupation? Is there evidence of any benefits, such as regulatory competition and innovation between jurisdictions?

The HIA’s response to this question is predictable, but it does raise questions about how and who should be providing advice to government and agencies to make decisions upon.

“Anecdotally HIA is aware of allegations of forum shopping, where unsuccessful applicants move to another state or territory to obtain registration, where there are less onerous requirements (such as no need to sit a written exam) then re-apply in their original jurisdiction for registration utilizing mutual recognition. HIA agrees this conduct, when it occurs, subverts the intent of mutual recognition. All state licensing schemes have ‘fit and proper’ person requirements and HIA would recommend that a positive obligation be placed on applicants to declare whether or not they have applied for an equivalent license in another state as part of the registration. Importantly for HIA members, the majority of whom are first and foremost operating building or trade contracting businesses within their own distinct jurisdictional borders, the focus of any nationally coordinated approach should be to improve and simplify conditions (not increasing the stringency) for licensees.”

We can probably all agree there must be a focus to ‘improve’ upon the current mess. However, there should never be an objective to ‘simplify’ the measures that it takes to obtain a license to build if that simplification process involves a decrease to the already quite low quality standards of training and issuance of related occupational qualifications.

The private RTO fiasco that has operated freely over the past four years has already severely compromised training standards, including the training standards for persons who wish to be builders. The federal legislation passed in the last sitting week of Parliament is designed to curtail some of the more outlandish operators by restricting any access to federal funds.

That’s a very good corrective step, but one that took far too long to happen. Furthermore, these specific changes are unlikely to have any substantial impact on the operators who are basically ‘selling’ nationally recognised qualifications currently linked to licensing. And with the ‘mutual recognition’ provisions now in place, your next builder who ‘trained’ for as little as six weeks in one state and then got their license issued there could next year be working as a fully licensed builder on your project in your state. Good luck with that job!

It seems the advice that the Productivity Commission gave the government on mutual recognition didn’t seek to solve the central issue at all. Instead it just made it easier for rogue operators to spread their highly questionable talent around for all building consumers to suffer equally. What we ended up with is another government website advisory service which seems to be the fashion of late. Read some of the FAQs and see if you think it makes any sense in delivering consistent, high quality standards of builder licensing that Australian consumers will trust to be relied upon.

Shopping and hopping. An ‘admirable’ outcome indeed.

  • Well Said.
    But as you and i know nothing is going to be done of it , white collar bureaucrats like it the why it is so it can generate a larger industry for themselves.
    In a nut shell if all builing projects went smoothly like thay should there would be alot less work for white collar's in the building industry. GEt the Drift

    • Thanks Peter. It would be great to think that the building construction industry sector would generate even more jobs if it operated in a more professional and uniform manner. My strong belief is that Australia should have a uniform,high standard of builder training/qualification/licencing regime and COAG seems the most appropriate vehicle to achieve this outcome.

  • Well said! It is time everyone in the industry wrote to their local member, State and Federal and asked for action. Beating up the Unions or bureaucracy is well and good, but this is a practical and effective initiative that is decades overdue.

    • Thanks Gilbert. In this regard I reckon that most people would agree that there is no rational argument as to why a national accreditation scheme for licencing of builders would be a negative thing for the construction sector. At present it is all over the place like a dogs breakfast! Good executive management requires reappraising ineffective systems and the negative outcomes such systems provide. As a supposed leading industry association you can't just sit back and say "we don't want any changes that would make it harder to be a builder". In fact, making it 'harder', through things like requiring higher educational training standards, and incremental licences for different work types may indeed be factors that helps the industry and consumers to be far more confident of each other into the future.

  • An observation. COAG up until 2013 appeared to be trying to unify Australia`s regulatory landscape. After 22013 it appears as if COAG has abandoned this approach all together. The unification of Australia`s laws regarding the building industry (the largest industry in the nation) would remove a lot of work from the legal profession that currently operates in six states and two territories in eight separate jurisdictions. Up until 2013 COAG through the Standing Committee of Attorney Generals had also been working "(Not Working)" on unifying Australia`s succession laws, another money making pit for lawyers. Coag has also abandoned this project after 25 years and handed it back to the states. The reason is vested interest. The interest being the legal profession. Many years age when Bob Hawk was Prime Minister I was caught up in the Arbitration Commission and I asked the head of the Commission why I was There, he replied who is the Prime Minister of Australia. Ask yourself who were the last two Prime Ministers of Australia, who is the Prime Minister of Australia and who is the leader of the opposition. Then ask what are their professions? Each one of them holds a law degree hence the power of the vested interest outweighs the power of common sense. .

  • I know that in the last year or two there's been quite a heavy crackdown on applications for mutual rec coming into Victoria from other states at the VBA. Quite a few people who were found to have 'gamed' the MR system were de-registered as a consequence.

    Don't know about the other states but it's definitely a lot harder to bring a mutual recognition application into Victoria now than it was even 12 months ago.

    • Well thats a good thing Jay but it cant be the solution. If the applicant were persistent enough they would 'lawyer up' and insist that the issuing authority follow the law. The ability for the VBA to exercise 'discretionary' selection would probably fall over if challenged.
      We need to have a national based system of builder licensing that is transparent, consistent and of a high standard to be the first step toward building consumer confidence in the building construction sector. At the moment it is an amalgam of regulatory authorities that leave us directionless.

  • COAG set out to arrive at mutual recognition of construction rules and survey standards for commercial ships and boats, and mutual recognition of credentials for the crews. 20 years so far and counting. Good luck.

    • You are correct with your pessimistic outlook Trevor. The government at federal and state levels all have feet of clay compared to the private sector drive for continuous improvement and change management when things clearly aren't working. It doesn't help when they can cite advice from alleged industry leaders such as the HIA that there should be nothing done that might make it harder to become a licensed builder. The status quo would seem to suit their objectives and a growing membership which doesn't necessarily mean that it is best for the long term interests of the Australian building and construction industry.

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