13. Licensing Boards
Need for Licensing Boards
161. The Government recognises that there are certain activities that pose such risks to the public that regulation is required. In general, where the risks are high, this regulation needs to be done through a formal structure that has the backing of statute and the power to enforce compliance. The review team considers that a statutory licensing board which represents the public interest as well as industry knowledge has been proven in other occupations to be an effective way of providing the necessary controls.
162. It was suggested to the review team that licensing activities should be carried out through industry associations. The model cited was that of the Institute of Chartered Accountants which sets standards and enforces rules of conduct over those who are members of the Institute. However, in our view, the voluntary nature of this model makes it unsuitable for licensing electrical and gas workers. We do not consider it desirable for electrical and gas workers to be able to volunteer whether to meet standards or not.
163. The other significant reason why a model such as the Institute of Accountants one is not directly applicable is that accountants who do not meet the standard of the Institute, or who do not wish to join, may still practice accountancy (although they may not use certain titles). The review team considers that a body such as a licensing board that has the power to prevent a person from entering an occupation or from continuing to practise their occupation entirely, is exercising a significant restriction on individuals. This requires defined statutory powers and processes that met the rules of natural justice.
Existing Licensing Boards
164. Submissions from members of the public and many groups and individuals in industry showed considerable support for the current registration/licensing process and for both boards.
165. The existing boards have the basic structure of a formal statutory body, although in the case of the EWRB the complaints assessment function is carried out and funded by Commerce. In addition, the EWRB is serviced by Commerce staff under a Memorandum of Understanding. In practice the location of the EWRB within Commerce, while operating at arms-length from Commerce, creates confusion for the public and for those working with the EWRB. In the view of many in the electrical industry, location within Commerce means that the EWRB must contribute to the cost of Commerce's overheads and this imposes higher than necessary costs on the EWRB, which flow through to fees and charges on the industry.
166. The PG&D Board is an independent statutory board that carries out its own servicing. The Act, which sets out the licensing and other procedures of the Board, is administered by the Ministry of Health. This is because the main business of the board is to do with plumbing and regulation on plumbing has traditionally been seen as a matter of public health.
Possible Alternatives
167. The discussion document published in December 1997 suggested that competing authorities could be authorised to recognise worker competence. The aim of this option was to produce greater flexibility in the provision of qualifications and to promote competition and greater choice for consumers.
168. This option was actively opposed by all groups (except one industry group) and all individual submitters who commented on this issue. Those opposing the proposal saw it as confusing to electrical and gas workers to have more than one body recognising competence. It would also be confusing for the public if they had to make judgements about the competence of a worker registered with Board A compared to a worker registered with Board B. Submitters felt that standards would slip as people would shop around for the easiest way into the occupation.
169. Another option considered by the review team was the model used by the British Government to recognise the competence of gas installers. Under this model the Government tenders for an agency to issue licences for three years subject to a contract which specifies criteria and standards to be met. Standards cover the initial recognition of competence and the disciplinary processes and audits of workers. This option has the advantage of being more flexible than a process set in legislation as the contract can be amended to deal with any operational problems as they arise. It is also designed to provide an incentive for the licensing body awarded the contract to perform to a high standard to ensure that its contract will be renewed.
170. The main disadvantage of this method is that it creates an active central role for government in awarding and monitoring the contract with the accredited body. This role is seen as out of step with the occupational licensing board model used by other occupations in New Zealand. However, the main deterrent to moving to a model of this kind is the existence of the present boards. There is no guarantee that the significant costs involved in changing to the contracting model would be outweighed by the expected benefits of significant increases in the efficiency and effectiveness of the licensing bodies.
Functions of Boards
171. The key functions of the boards should be to:
- recognise the current competence of workers to undertake certain electrical and gas work specified in legislation;
- maintain discipline over them; and
- to exclude workers who do not meet standards of safety or competence.
Proposed Changes to EWRB
172. The current administrative situation of the EWRB being located within Commerce and therefore having to carry a share of Commerce's overheads is imposing some higher than necessary costs. As well as the costs of renting accommodation and services such as lighting which a board would have to meet wherever it was located, current overheads include the cost of some highly specialised services such as the Commerce library, corporate training programmes, and senior public service management. If the EWRB were a stand-alone Board, it could choose the range and level of services it wished to purchase.
173. The review team considers that the EWRB should be separated from Commerce and operate as a stand-alone, self-funding statutory body. Questions of location and staffing will need to be sorted out between Commerce management and the EWRB. There would be one-off transitional costs of this change, for such things as setting up a stand-alone computer system, but there is likely to be a saving in continuing operating costs to the EWRB. This should flow on as savings to the industry.
174. As a stand-alone statutory body the EWRB would also be expected to fund the complaints assessment function currently met by Commerce. This costs approximately $200,000 per year.
Proposed Changes to the PG&D Act
175. The Ministry of Health reviewed the PG&D Act as part of a review of all health sector occupational regulation in 1996. The changes suggested were:
- increased focus on certification and monitoring of practitioner competency and less focus on registration;
- changes to the membership of the board to remove Health staff;
- separation of the registration and disciplinary functions of the boards through establishing a separate complaints assessment committee; and
- a joint disciplinary tribunal hearing disciplinary cases relating to electrical workers, plumbers and gasfitters.
176. A Health Occupational Regulation Amendment Bill is currently before Parliament. This changes the current structure of the board away from representatives nominated by industry groups and Health ministry representation to a mix of lay and trades members appointed by the Minister of Health. It also raises the maximum level of fines to $10,000.
177. The Ministry of Health has proposed that the responsibility for administering the PG&D Act should be passed to Commerce, since Health has few operational functions remaining to it. The review team sees some logic in having the licensing bodies for both gas and electricity reporting to the same government agency. However, which agency this should be may depend upon work to be done as part of a broader review into the administration of public and consumer safety within central government. Until conclusions are reached on this it seems sensible for the administration of the PG&D Act to stay with Health.
Accountability of the Boards
178. With the EWRB separating from Commerce and the PG&D Board no longer having a Health representative, there is a reduced oversight of the decisions made by the boards. In other occupational areas there have been concerns expressed that self-regulating boards can become "closed shops". Closed shops may exercise their discretion unreasonably to reduce the amount of competition in an occupation and make decisions on disciplinary matters that may not have stood up to more public scrutiny.
179. To avoid any possibility of this occurring, it is proposed that the accountability of both boards be strengthened. This could be achieved through a requirement in legislation that both boards submit a business plan to the relevant Minister each year which would include specific proposals for ensuring the maintenance of competence within their occupational group and for increasing the level of safety among their workers. The boards would be required to report to the Minister on their performance in the following year. Business plans and performance results should be made public.
180. The government agency responsible would have a monitoring role, which would include advising the Government on the standards set and the performance of the boards.
Merging Boards
181. The review team considered whether this opportunity should be taken to merge the EWRB and the PG&D Board as a means of encouraging a consistent approach and reducing administration costs through more joint operations.
182. This idea was not supported by either board, as they considered that the technical issues for electricity and gas were too different for one board to deal with competently. It was pointed out that PG&D Board covers plumbers and drainlayers as well as gasfitters. Consequently, a board able to cover those trades, plus the key sectors of the electricity industry and include lay representatives would be too large to manage efficiently. It may also be so costly to operate that any savings in having a merged board would be eliminated.
183. While the review team believes that the two self-certifying groups (electrical and gas workers) could be handled in a similar way by one board, it accepts that plumbing and drainlaying, which do not allow self-certification but require third party inspection, have significant differences from energy work.
184. Another view of the review team is that a compulsory merger when both parties have objections is unlikely to be successful. Our suggestion is that Government encourages both boards to consider joint administration of functions (e.g. licensing) and joint location. These were recognised as possibilities by both Boards. Any changes to legislation should be worded so as not to preclude joint administration or an eventual merger.
185. It should be noted that as part of the process of avoiding confusion and overlap, the processes under the Electricity, Gas, and PG&D Acts are to be aligned as far as possible. This will make it easier for joint administration both within the Government and through the licensing boards.
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