As 2006 Plumbing Code Regulation

REGULATION IMPACT STATEMENT

ON THE DRAFT

PLUMBING CODE OF AUSTRALIA

Comments on this RIS should be sent to:

National Plumbing Regulators Forum C/O Plumbing Industry Commission

PO Box 360 Caulfield East VIC 3145

Australia or Fax to: (03) 9889 3999 or Email to: [email protected]

All submissions must be received by 5.00pm on 14 October 2002

Regulatory Impact Statement – Plumbing Code of Australia

TABLE OF CONTENTS

1. EXECUTIVE SUMMARY ................................................................................................... 3

2. INTRODUCTION ................................................................................................................ 5

2.1 Legislative review ......................................................................................................................... 5

3. BACKGROUND................................................................................................................... 7 3.1 Need for change............................................................................................................................. 7 3.2 National systems reform ................................................................................................................ 7 3.3 Fisher Stewart Report ................................................................................................................... 8 3.5 Peter Laver Report ....................................................................................................................... 9

4. THE PLUMBING CODE OF AUSTRALIA...................................................................... 10

4.1 Scope of the Code ....................................................................................................................... 10 4.2 PCA - Intended application ........................................................................................................ 11

5. RESTRICTION ON COMPETITION AND IMPACT ON BUSINESS ............................ 12

5.1 Introduction ................................................................................................................................. 12 5.2 Summary of objectives ................................................................................................................. 12 5.3 What are the relevant markets?................................................................................................. 123 5.4 What are the boundaries of the markets? .................................................................................... 13 5.5 What constitutes market failure? ................................................................................................. 14 5.6 What market failures does the PCA address?.............................................................................. 14 5.7 Market intervention potential of the PCA ................................................................................... 15 5.8 What are the potential restrictions on competition?.................................................................... 16 5.9 Impact on business ...................................................................................................................... 16

6. QUALITATIVE COST BENEFIT ANALYSIS OF ADOPTION OF THE CODE........... 17

6.1 Potential costs and benefits ......................................................................................................... 17 6.2 Summary of principal costs and benefits ..................................................................................... 18 6.3 The costs ..................................................................................................................................... 19 6.4 The benefits to Industry ............................................................................................................... 19 6.5 The benefits to Government ......................................................................................................... 20 6.6 The benefits to Consumers........................................................................................................... 20

7. ALTERNATIVE OPTIONS ............................................................................................... 22

7.1 The options .................................................................................................................................. 22 7.2 No legislative control .................................................................................................................. 22 7.3 Maintianing the status quo ......................................................................................................... 22 7.4 Nationally consistent PCA .......................................................................................................... 22

8. STATEMENT OF CONSULTATION PROCESS ............................................................. 23

8.1 National Consultation.................................................................................................................. 23 8.2 State Consultation ....................................................................................................................... 23 8.3 Responses .................................................................................................................................... 23

page 2 National Plumbing Regulators Forum

020427_1.doc Regulatory Impact Statement – Plumbing Code of Australia

1. EXECUTIVE SUMMARY

The Fisher Stewart Report1 highlighted marked disparities in regulatory regimes between the various States and Territories. As a consequence of that, significant opportunities for improvement are apparent. Effecting most of those improvements would require changes to existing State and Territory regulatory regimes. Such outcomes are unlikely to be achieved in the near term. The Laver Report2 recognised that important improvements could be achieved in the short term through the consolidation of all plumbing regulatory requirements into a national Code that, in turn, is called up by each individual regulator. To facilitate that outcome, Recommendation 4 of the Laver Report supported the establishment by Australian Governments of the National Plumbing Regulators Forum (NPRF) and charged it, amongst other things, with the responsibility for the preparation of the Plumbing Code of Australia. Significant confusion existed in relation to certification and authorisation of plumbing products as a result of the vacuum generated by the demise of the Committee for Plumbing Products Authorisation. The availability only of Quality Assurance Services as a Certifying Body compounded the situation and led to some manufacturers seeking alternative avenues that were not necessarily to the interest of regulators or to fostering a cost efficient and effective industry. The draft Plumbing Code of Australia (Code) has been prepared by the NPRF to address all of the above requirements. It provides for:

(a) installation requirements relating to all on-site plumbing services and systems; and

(b) processes for certification and authorisation of plumbing products.

In order that the Code contains all regulatory requirements, State and Territory variations that persist will be provided in an appendix. In addition, the Code provides for certification of plumbing products by any person accredited by the Joint Accreditation System of Australia and New Zealand (JAS-ANZ). As such, the strength of the Code rests on the consolidation of existing requirements and the incorporation of procedural improvements for the certification of plumbing products into a comprehensive, national, user friendly document that can provide immediate benefits to all stakeholders including Governments, those in the plumbing industry and consumers. The Code is intended to be the basis of nationally consistent regulations for all on-site plumbing installations and plumbing product certification and authorisation. It is based on preventative policy and equity. Its objective is to provide an appropriate level of protection for the community, amenity, public health, water utility operator’s infrastructure, water resources and the environment which, at the same time, encourages the conservation of water and energy resources. 1 Fisher Stewart Report: On Site Plumbing Regulatory Framework – Commonwealth

Department of Industry Science and Resources (http://www.isr.gov.au/industry/building/) 2 Review of the Australian Building Codes Board – Commonwealth Department of Industry

Science and Resources (http://www.isr.gov.au/industry/building/)

National Plumbing Regulators Forum page 3

http://www.isr.gov.au/industry/building/


The Code introduces a nationally coordinated and holistic approach to an otherwise parochial setting of regulatory requirements for plumbing services and systems. It addresses a wide range of existing issues relating both to the installation of plumbing services and systems and the certification of plumbing products to the extent that significant benefits can accrue even though the Code continues to contain some State and Territory variations. The Code provides the basis upon which reform to achieve greater national consistency may be developed and implemented. It is in the initial stage of an on-going program for plumbing regulation reform, a process which began nationally more than a decade ago with the discontinuation of the direct involvement of water utilities with certification and authorisation of plumbing products and the separation from them of the responsibilities for plumbing installation regulation. The Code is prepared for adoption by jurisdictions without the need for significant change to existing local legislation. National consistency has not yet been achieved although significant inroads have been made towards that goal. The introduction of the Code prior to achieving national consistency was determined so that major gains may be derived much earlier for all major stakeholders than would otherwise be the case. Consequently, this Regulatory Impact Statement (RIS) is prepared not as a comparison of a regulated versus a non-regulated environment. Instead, it is prepared on the basis of comparing the current regulated environment to one that would be encountered consequent to the adoption of the Plumbing Code of Australia. On that basis, this impact statement finds that the relevant markets affected by the Code are -

(a) Federal, State, Territory and Local Governments;

(b) plumbing industry;

(c) building and construction industries;

(d) building services industry;

(e) water utilities;

(f) consumers;

(g) manufacturers/importers;

(h) retail industry;

(i) general public/community; and

(j) education, industry training and retraining service providers. The Code does not restrict competition. It does have some impact on business with many of the impacts being positive. The impact statement finds that the net public benefit of the Code exceeds the dis-benefits.



2. INTRODUCTION

2.1 Legislative Review

2.1.1 The demise of the Committee for Plumbing Product Authorisation occurred on the expiry of a Memorandum of Understanding (MOU) between the Agriculture and Resources Management Council of Australia and New Zealand (ARMCANZ) and Standards Australia. That Memorandum expired in 1998. As a result, stewardship of the National Certification of the Plumbing and Drainage Products Scheme, of which MP 52 - Manual of authorisation procedures for plumbing and drainage products was (and remains) an integral part, was left without official sanction.

2.1.2 The Fisher Stewart Report (2000) on the Australian On-site Plumbing Regulatory Framework concluded that:

(a) plumbing regulatory functions are the responsibility of individual State and Territory;

(b) each State and Territory has its own regulatory system in which plumbing work is approved, products certified and plumbing practitioners licensed;

(c) all States and Territories call up the National Plumbing and Drainage Code AS/NZS 3500 in technical regulations, but in differing parts and versions;

(d) the performance provisions of AS/NZS 3500 are called up by some jurisdictions and others have similar performance requirements in Codes or regulations;

(e) State variations to AS/NZS 3500 have been called up in State and Territory regulations; and

(f) all States and Territories adopt SAA MP 52 – 1997, Manual of Authorisation Procedures for Plumbing and Drainage Products.

(The Fisher Stewart Report is available from the Commonwealth Department of Industry Science and Resources and may be viewed on their website http://www.isr.gov.au/industry/building/.)

2.1.3 Because of the above, the current regulatory environment can result in:

(a) significant variation in requirements between the different jurisdictions in relation to on-site plumbing installations;

(b) concerns about the lack of consistency between regulatory regimes;

(c) an apparent lack of accountability and transparency in decisions relating to installation approvals and product certification;

(d) delays imposed on the approval of installations and on product certification; and

(e) significant and unnecessary associated costs imposed on the industry and the community.

2.1.4 The Laver Report (2000) on the Review of the Australian Building Codes Board supported the establishment of the National Plumbing Regulators Forum (NPRF) which would have an objective to develop the Plumbing Code of Australia that, amongst other things, creates an accountable and transparent system of national standards for plumbing installations and product certification and is consistent in scope and structure with the Building Code of Australia (BCA).



(The Laver Report is available from the Commonwealth Department of Industry Science and Resources and may be viewed on their website http://www.isr.gov.au/industry/building/.)

2.1.5 The NPRF exists entirely through cooperative action and has no executive power. The members from individual jurisdictions represent statutory responsibility for regulation of plumbing, occupational registration and/or on-site plumbing regulation.

2.1.6 The NPRF has prepared a draft Code in accordance with its terms of reference. The Code is a consolidation of all State and Territory on-site installation and product certification requirements.

2.1.7 The adoption of the Plumbing Code of Australia by regulatory authorities under their existing regulatory regimes is not seen to effect any change in the regulated environment other than to provide a more consistent approach to on-site installation and product certification. Nevertheless, because the Code has been assessed as impacting on business, a Regulation Impact Statement demonstrating that the significant impacts on business to be imposed are justified in the public interest has to be prepared. This document represents that impact statement.

2.1.8 Adoption of the Plumbing Code of Australia by the individual regulator will deliver better outcomes for:

(a) the plumbing industry;

(b) the building and construction industry;

(c) the building services industry;

(d) the water utility retail industry;

(e) manufacturers and importers;

(f) consumers;

(g) education, industry training and re-training service providers; and

(f) the community.

2.1.9 This new plumbing control system is the result of a holistic approach that includes all closely related matters.



3. BACKGROUND

3.1 Need for Change

3.1.1 There are a number of reasons why changes need to be considered at this time and they include:

(a) the need to address nationally identified systems reform drivers, issues and proposals such as; ∗ Recommendation 4 in the Laver Report (2000) in the Review of the

Australian Building Codes Board; ∗ the thrust towards national uniformity; ∗ the National Competition Policy and business legislation reform; and ∗ Mutual Recognition legislation.

(b) the need to address State, local government, industry and consumer developed policies and reforms such as: ∗ national environmental policy and sustainable development; ∗ legislation consolidation; ∗ social reform and consumer rights.

3.2 National Systems Reform

3.2.1 In Australia, regulation of plumbing installations has evolved over the years primarily as a result of concerns about water resource and community health, safety and welfare issues. Accordingly, since at least the early twentieth century, there has been consumer, property and environmental protection and protection to the relevant authorities’ water supply, sewage and stormwater disposal infrastructure through regulation of plumbing works. In recent times, such concerns have broadened to include the conservation of resources, especially that of water, and minimising or optimising energy usage.

3.2.2 As a result of the historical settlement and development of this vast country, plumbing regulatory functions became the responsibility of State or Territory or Local Governments. A considerable amount of liaison and cooperation is required between the eight Australian States and Territories to coordinate their activities in respect of regulatory strategies, standards and certification of products.

3.2.3 Further, the regulatory framework of the plumbing industry is undergoing considerable changes with the introduction of progressive reforms within the water utilities which were the traditional industry regulators. A number of jurisdictions are at different stages of separating their responsibilities relating to the provision of services from those relating to the regulation of on-site plumbing installations. These jurisdictions are facing significant changes as a result of the metamorphosis from the role of the traditional water authorities to the new and challenging roles of being competitive water utilities. An unintentional effect of the changes has been a delay in progressing reforms on the regulatory framework for plumbing.

3.2.4 The Committee for Plumbing Products Authorisation was established to act as a single point of contact on plumbing and drainage product authorisation issues. It was established under a Memorandum of Understanding between the Agriculture and Resources Management Council of Australia and New Zealand (ARMCANZ) and Standards Australia under which the National Certification of Plumbing and Drainage Products scheme was ensured effective operation.



3.2.5 The Committee, in conjunction with Standards Australia, was responsible for the preparation of MP 52 and MP 78.

3.2.6 The Memorandum expired in 1998. It was not renewed and resulted in the consequential demise of the Committee for Plumbing Products Authorisation.

3.2.7 The demise of the Committee resulted in a period when there was no formal mechanism by which national plumbing policy issues could be identified and discussed.

3.2.8 In the absence of an appropriate body to take over from the Committee, significant confusion has arisen amongst manufacturers and plumbers about product certification and authorisation. This, in turn, places additional difficulties on jurisdictions that regulate plumbing installations.

3.2.9 Standards Australia is responsible for maintaining standards relating to on-site plumbing installation, including AS/NZS 3500. It is also responsible for maintenance and distribution of MP 52 - Manual of authorisation procedures for plumbing and drainage products and MP 78 - the Manual for the assessment of risks of plumbing products.

3.2.10 There are other plumbing related technical standards committees. These deal with the National Plumbing and Drainage Standard (AS/NZS 3500) and related standards. They are solely focussed on technical matters and are not involved in national regulatory issues.

3.2.11 Standards Australia is the owner of trade marks used in schemes for national certification of plumbing products. The licence to issue compliance with those marks has been awarded to Quality Assurance Services. To date, no other Certifying Body is similarly licensed.

3.3 Fisher Stewart Report

3.3.1 The Fisher Stewart Report was published by the Australian Building Codes Board (ABCB) in March 2000. It was commissioned by the Commonwealth Department of Industry Science and Resources and provided an outline of the on-site plumbing regulatory framework as it existed in each State and Territory throughout Australia. The Report reflected the situation as it then existed and any known future changes. The regulatory framework was set out in a comparative manner. The Report did not analyse or recommend any reforms.

3.3.2 Nevertheless, it was clear from the information provided that opportunities existed for the rationalisation of the regulation of plumbing on a national basis which could provide significant benefits to industry stakeholders and the community because:

(a) each State and Territory has its own regulatory system in which plumbing work is approved, products certified and plumbing practitioners licensed;

(b) all States and Territories call up the National Plumbing and Drainage Code AS/NZS 3500 in technical regulations, but in differing parts and versions;

(c) the performance provisions of AS/NZS 3500 are called up by some jurisdictions and others have similar performance requirements in Codes or regulations; and



(d) State variations to AS/NZS 3500 have been called up in State and Territory regulations.

3.4 Peter Laver Report

3.4.1 The Laver Report (2000) on the Review of the Australian Building Codes Board recommended, in Recommendation 4, that responsible Ministers note and endorse the establishment of the National Plumbing Regulators Forum and for the NPRF to prepare the Plumbing Code of Australia which would be consistent in scope and structure with the Building Code of Australia.

3.4.2 The aim of the NPRF, through the Code, is to implement a system reform to regulate plumbing matters and to facilitate enforcement and resolution of disputes.

3.4.3 The objectives of the Plumbing Code of Australia are as follows:

(a) to establish national objectives for plumbing work on a performance basis;

(b) to achieve effective protection of public health, safety, amenity, the environment and public infrastructure;

(c) to create an accountable and transparent system of national standards and product certification;

(d) to encourage best practice;

(e) to contain the most efficient solutions;

(f) to call up Australian Standards; and

(g) to be compatible with other Codes and Standards.

3.4.4 Inherent in those objectives are the following considerations:

(a) provision of an efficient and effective system for administering and enforcing plumbing and related safety matters and resolving disputes;

(b) protection of consumers, the community at large and the environment from likely failures of plumbing services and systems;

(c) achieving an efficient, innovative, competitive and sustainable plumbing industry.

(d) promoting the consolidation of plumbing legislation leading ultimately to national consistency.



4. THE PLUMBING CODE OF AUSTRALIA

4.1 Scope of the Code

4.1.1 The Plumbing Code of Australia sets out the provisions for on-site plumbing installations and procedures for plumbing product certification and authorisation throughout Australia.

4.1.2 Part A is a uniform set of technical provisions for the construction, installation, replacement, repair, alteration and maintenance of plumbing and drainage installations.

4.1.3 The technical provisions have been written on a performance basis to permit flexibility and encourage innovation. However, prescriptive solutions obtainable from published Australian Standards (AS) and Australian Standards/New Zealand Standards (AS/NZS) are also referenced, where applicable, as acceptable deemed-to-satisfy solutions.

4.1.4 Part B defines the processes for the certification and authorisation of plumbing products. It adopts, with some significant modifications, the procedures for plumbing and drainage product approval introduced and managed by the Committee for Plumbing Products Authorisation. Part B highlights that appropriate products are every bit as important as the way installations are constructed. Its incorporation in the Code will address the uncertainties that some manufacturers face. The opportunity for any Certifying Body approved by JAS-ANZ to become a plumbing product certifying body will provide competition, shorten the certification timeframe and reduce associated costs.

4.1.5 For completeness, State and Territory variations that persist are provided in the appendix. In this way, the Plumbing Code of Australia becomes a comprehensive, user friendly reference document that incorporates all regulatory requirements in the one document.

4.1.6 The development of the Code has resulted in some rationalisation and reduction of State and Territory variations. Amendments to the existing plumbing product certification processes result in a more flexible, responsive and cost effective mechanism. The periodic review of the Code will provide opportunities for further rationalisation and improvements toward a nationally consistent regulatory platform that works with, rather than hinders, industry stakeholders.

4.1.7 The performance requirements for installations and product certification and authorisation processes have been extracted and revised, as appropriate, from the Tasmanian Plumbing Code, relevant Australian Standards, Standards Australia Miscellaneous Publications (MP 52 and MP 78) and related documents. Essentially, it does not contain any more requirements than have already been identified and specified in existing standards and codes. As a consequence, the strength of the Plumbing Code of Australia is in the fact that it presents all regulatory requirements in the one document that also addresses significant problems with the certification of plumbing products.

4.1.8 The Code does not impact on existing regulatory regimes in that its adoption does not result in an increase or decrease in the level of regulation.

4.1.9 The Code provides a vehicle for further regulatory reform.



4.2 Plumbing Code of Australia – Intended Application

4.2.1 Initially, the PCA would include all areas currently regulated by the individual jurisdictions. In that sense the PCA is not introducing a new regulatory burden. It only consolidates existing regulations into one document. This approach will allow individual jurisdictions to amend their specific legislative provisions and, overtime, achieve a common set of technical plumbing requirements across Australia.

4.2.2 The adoption of the Code by all jurisdictions will overcome current difficulties with inconsistencies and apparent lack of accountability and transparency.

4.2.3 Adoption of the Code formalises and provides an effective and efficient national means for product certification and authorisation that, to a number of people, is currently in limbo. This, in turn, will resolve a significant problem that has arisen for industry stakeholders, including Governments and manufacturers.



5. RESTRICTION ON COMPETITION AND IMPACT ON BUSINESS

5.1 Introduction

5.1.1 Any analysis of restrictions on competition requires an understanding of the legislative objectives, the relevant markets, market failures, the aims of the Plumbing Code of Australia and any other social or community goals to be achieved. Generally, unrestricted competition under perfect market conditions is considered to be the most efficient way of allocating limited resources.

5.1.2 A perfect market includes lack of monopolies, full information, equal access and lack of external effects. Frequently, however, all requirements of a perfect market are not all present or are skewed. An unregulated market may not always provide the best possible economic or social outcomes.

5.1.3 The scope and intended application of the Code requires that consideration of restriction on competition and impact on business should be on the basis of comparison between the current regulated environment and that which will result as a consequence of the adoption of the Code.

5.2 Summary of objectives

5.2.1 The objectives of the Code are to provide a nationally consistent set of requirements that -

(a) are performance based for the installation of on-site plumbing services and systems;

(b) achieve effective protection of public health, safety amenity, the environment and public infrastructure;

(c) create an accountable and transparent system of national standards and product certification;

(d) contain the most efficient solutions;

(e) call up Australian Standards; and

(f) are compatible with other Codes and Standards.

5.2.2 The secondary objectives are to -

(a) protect residential, commercial and industrial property against damage;

(b) complement national objectives to facilitate competition and labour exchange and promote consistent competencies;

(c) provide the means by which natural resource and energy conservation may be encouraged; and

(d) reduce restriction within the market without compromising public health and consumer protection.

5.3 What are the relevant markets?

5.3.1 The Plumbing Code of Australia is potentially relevant to those markets associated with the regulation, design, manufacture, construction, installation, replacement, repair, alteration and maintenance of any part of a plumbing service or system within a property.



5.3.2 The main markets are -

(a) Governments – Federal, State, Territory and Local;

(b) plumbing industry;

(c) building and construction industry;

(d) building services industry;

(e) water utilities;

(f) consumers;

(g) manufacturers/importers;

(h) retail industry;

(i) general public/community; and

(j) education, industry training and re-training service providers.

5.4 What are the boundaries of the markets?

5.4.1 A market is essentially an arrangement in which goods and services are voluntarily, potentially or actually, exchanged between buyers and sellers. A market has a number of aspects. These are -

• the product aspect

• the geographic aspect

• the functional aspect (production, wholesale, retail); and

• the temporal aspect

5.4.2 In a competitive market there is competition between providers based on price or quality.

5.4.3 The relevant markets affected by the Code may be dimensioned by one or more of these market boundaries.

5.4.4 Product: The most obvious product in the relevant markets is an on-site plumbing installation; however, the services offered in the various markets are also related to products. Products may also include designs, drawings, certificates, warranties, inspections, maintenance, certification of products and plumbing products themselves.

5.4.5 Geographic: The principal geographic market area is each of the States, Territories and the Commonwealth of Australia and some overseas countries. Clearly the market for products is not necessarily restricted to the continent of Australia but can extend to international markets.

5.4.6 Functional: The relevant markets are a mixture of retail and wholesale markets. A purchaser may purchase goods and services directly from a provider (a plumber) who in turn purchases goods (materials) and services (design, sub-contractors) in a wholesale market.

5.4.7 Temporal: There are some time dependant aspects to the markets affected by adoption of the Code. The regulation, design, construction, installation, replacement, repair, alteration and maintenance of any part of a plumbing service or system within



a property are influenced by the applicable standards at the time as well as any time-related regulatory controls or benefits.

5.5 What constitutes market failure?

5.5.1 Market failure is said to occur when markets collapse or do not operate efficiently or fairly. The most common sources of market failure are:

(a) imperfect information balance between consumers and plumbers

(b) inconsistency between regulatory regimes;

(c) apparent lack of accountability and transparency in the administration of on-site plumbing installation regulations and certification of plumbing products;

(d) diversity and complexity of regulatory requirements;

(e) outdated regulations; and

(f) limited choice in Certifying Bodies.

5.5.2 Inconsistency between regulatory regimes - The current regulatory environment in Australia can and does give rise to inconsistencies that stem from a number of factors, including the different ways in which installation standards and codes have been incorporated into regulations and the presence of local variations.

5.5.3 Lack of accountability and transparency – The absence of a formalised national system for plumbing installation and the certification and authorisation of plumbing products leads, at times, to the adoption of parochial or ad hoc assessment procedures. In such situations, the decision of one jurisdiction can be different from that of another and gives rise to the perception of a lack of accountability and transparency.

5.5.4 Diversity and complexity of regulatory requirements – The various ways in which existing standards and codes are adopted, especially with the inclusion of local variations, gives rise to subtle but significant differences in regulatory requirements between regulatory regimes. As a result, a plumber or merchant relying on his knowledge of the regulations in a particular area runs the risk of non-compliance when working in a new or unfamiliar area.

5.5.5 Outdated requirements – It is recognised that due to changing community expectations and needs and of technological advances, amendments to legislation are necessary with the progress of time. Failure to keep up with the times can result in requirements that are unrealistic and has consequential cost and project completion implications that have to be borne by the industry and the community.

5.5.6 Limited choice in Certifying Bodies – Currently, plumbing products are certified in accordance with the StandardsMark, TypeTest Mark and the WaterMark procedures. These “marks” are owned by Standards Australia and are licensed to Quality Assurance Services for issue to complying products. Existing commercial arrangements between Standards Australia and Quality Assurance Services prevent other bodies from performing as alternative certifying bodies. The outcome is that a monopoly situation exists.

5.6 What market failures does the Plumbing Code of Australia address?

5.6.1 The market failures that adoption of the Code will address are all of the above except imperfect information, that is, a significant step forward will be taken to



minimise inconsistency between regulatory regimes, lack of accountability and transparency, diversity and complexity of regulatory requirements, outdated requirements and remove the monopoly that Quality Assurance Services has on the certification of plumbing products.

5.7 Market intervention potential of the Code

5.7.1 Regulatory inconsistencies – Currently, the absence of a national industry code results in existing codes and standards being called up in differing ways. This has resulted in some inconsistencies between jurisdictions. The situation is exacerbated through the adoption of local variations. Adoption of the Code provides the means to achieve national consistency at a level never before possible. It is recognised that the presence of local variations in the Code, even if significantly reduced, prevents the achievement of regulatory consistency throughout the nation. However, there are opportunities for further culling and possible elimination of the variations with the progress of time.

5.7.2 Lack of accountability and transparency – The Plumbing Code of Australia incorporates:

(a) performance based requirements for on-site plumbing installations;

(b) procedures for the certification and authorisation of plumbing products; and

(c) variations pertinent to each regulatory jurisdiction.

The Code references existing standards. Representatives from all relevant jurisdictions participate in the drafting of the Code as a result of which the number of local variations has been markedly reduced. Adoption of the Code will give rise to a greater degree of consistency in decisions from jurisdictions. As a result, industry complaints relating to lack of accountability and transparency should be markedly reduced.

5.7.3 Diversity and complexity of regulatory requirements – The Code contains all regulatory requirements in the one document. In this way, plumbers and merchants no longer have to walk through a maze of legislation if they choose to work in different regions of the country.

5.7.4 Outdated requirement – The large number of local variations that currently exist tend to be historically based and have arisen due to events or incidents encountered by or related to a particular jurisdiction. They had significant relevance at the time and, as a result, measures such as the variations had been invoked in recognition. In recent times, most jurisdictions lack a systematic program for the review of these variations. As a result of this and the dwindling pool of available expertise, there is likely to be a persistence of unsupportable or unintended legislated requirements. The Code is the outcome of a recent review involving relevant jurisdictions. The provisions contained within the Code are current in relation to technological advances, the aim to minimise regulation and the thrust towards national consistency whilst still maintaining the appropriate level of protection for the community and the environment.

5.7.5 Limited choice in Certifying Bodies – The lack of choice in Certifying Bodies for plumbing product certification is a result of an agreement between Standards Australia and Quality Assurance Services. An outcome of recent negotiations between the NPRF and Standards Australia has resulted in a significant change to that situation and agreement has been reached with Standards Australia that third party Certifying National Plumbing Regulators Forum page 15


Bodies other than Quality Assurance Services can issue, under licence, certification to the WaterMark. The procedures for plumbing product certification and authorisation contained in the Code highlights that people approved by JAS-ANZ as Certifying Bodies will be able to issue WaterMark certification to complying products, subject to appropriate licensing by Standards Australia. As a consequence, the certification of plumbing products will no longer be limited to one body.

5.8 What are the potential restrictions on competition?

5.8.1 The Plumbing Code of Australia has been developed through the consolidation of codes, regulations and standards currently referenced by jurisdictions. Its adoption does not change current restrictions on competition in relation to the general requirements for plumbing installations. It might do so when individual jurisdictions expand or reduce their current requirements in line with the other jurisdictions. However, the impact of such action cannot be assessed in advance and would need to be addressed at the time of adoption.

5.8.2 The Code addresses a number of areas of market failure in a number of inter-related ways which, together, provides the framework for a reformed system of plumbing control legislation in Australia.

5.8.3 Importantly, adoption of the Code does away with the monopoly on the certification of plumbing products currently enjoyed by Quality Assurance Services.

5.9 Impact on business

5.9.1 Market failure may result in an impact on business or an impact on the consumer. Likewise market corrections or restrictions will have an effect on business or consumers which may be positive or negative. The market interventions proposed by the Code are designed to provide the plumbing market with a framework for holistic systems reform. Those interventions will have either positive or negative impacts on business or the community. However, as described in Clauses 5.7 and 5.8, their impact is generally positive.

5.9.2 The reformed system is not a completely new system. It relies heavily on existing plumbing installation standards as well as procedures for plumbing product certification and authorisation. The existing standards underpin the proposed Code and permits Standards Australia to withdraw from the publication and maintenance of the performance aspects of standards associated with plumbing installations and the administrative aspects of plumbing product certification and authorisation.

5.9.3 Therefore the impacts on business should not be measured against a total or partial “without” situation but more appropriately against the “current” structure.



6. QUALITATIVE COST BENEFIT ANALYSIS OF ADOPTION OF CODE

6.1 Potential costs and benefits

6.1.1 The possible impact on business arises from the inclusion in the Code of areas of control that may not be applicable to all jurisdictions, e.g., the installation requirements for heating, ventilation and air conditioning which are applicable only to Victoria. It can be argued that a result of such inclusions could be an expansion of regulatory control by other jurisdictions that have not, as yet, instituted control in such areas. However, there is also the possibility that the control of that particular area could be called into question, progressively revised and confined or be eliminated in subsequent reviews of the Code.

6.1.2 A comprehensive review of plumbing legislative requirements has not been conducted and the associated development of a nationally consistent set of provisions has not been carried out because the outcome, desirable as it is, will require extensive consultations and negotiations that can span many years. The approach taken has the advantage that the Code can provide a firm and definitive basis for future reviews while achieving a better regulatory environment for jurisdictions and, generally, provide cost efficiencies to the plumbing industry.

6.1.3 The full scope of potential costs and benefits from the adoption of the Plumbing Code of Australia is set out in the table below.

COSTS BENEFITS • Change to the existing regulatory template. • Possible expansion of regulatory role by

jurisdictions. • Perception that the Code is a bureaucratic

exercise to inhibit industry progress.

• Cost efficiencies in regulatory arrangements.

• Improved regulatory outcomes. • Significant advance towards nationally

uniform regulatory outcomes. • More meaningful validation of industry

performance. • More meaningful validation of industry

training performance. • Greater efficiency in the utilisation of

national training budget • Competition in product certification with

associated improvements in cost efficiencies.

• Nationally uniform and clear application of product approval process.

• Vehicle for national policy development, e.g., energy conservation and environmental protection.

• Nationally consistent thrust towards protection of water utilities infrastructure

• Compatibility with the BCA and other codes and standards.

• Complementary to the BCA. • Clarification of roles of the BCA and

Plumbing Code. • Platform for further reforms. • National Regulation Impact Statement. • Possible retraction of regulatory role in

some areas.



6.2 Summary of principal costs and benefits

6.2.1 The Cost - Benefit statements in the preceding section may be summarised into principal cost and benefit areas in relation to the principal cost bearer groups and principal benefit receiver groups.

COSTS BENEFITS

Plumbing Industry • Change to regulatory template. • Possible expansion of regulatory role by



• Significant advance towards nationally uniform regulatory outcomes.

• More meaningful validation of industry performance.

• More meaningful validation of industry training performance.

• Transparent product certification process with associated improvements.

• Competition in product certification with associated cost efficiencies.




Plumbing Code.

Government • Change to regulatory template. • Possible expansion of regulatory role by



• Cost efficiencies in regulatory arrangements.

• Improved regulatory outcomes. • Significant advance towards nationally

uniform regulatory outcomes. • More meaningful validation of industry

performance. • More meaningful validation of industry

training performance. • Greater efficiency in the utilisation of

national training budget • Nationally uniform and clear application

of product approval process. • Vehicle for national policy development,

e.g., energy conservation and environmental protection.



Plumbing Code. • Platform for further reforms. • National Regulation Impact Statement. • Possible retraction of regulatory role in

some areas.

Consumers • Change to regulatory template. • Possible expansion of regulatory role by

• Improved regulatory outcomes. • Competition in product certification with



COSTS BENEFITS jurisdictions.

• Perception that the Code is a bureaucratic exercise to inhibit industry progress.

associated improvements and cost efficiencies.


• Nationally consistent thrust towards protection of water utilities infrastructure

6.3 The costs

6.3.1 All of the identified costs listed in Clause 6.1.3 are relevant to all principal groups comprising the plumbing industry, governments and consumers.

6.3.2 The change in regulatory template will impact adversely on all sectors, some to a greater degree than others. However, it is expected that the requirement to adjust to a different regulatory template will be relatively small and be of a temporary nature.

6.3.3 There is a risk that the inclusion in the Plumbing Code of Australia of regulatory requirements that are imposed only by one or a few regulators can result in their subsequent adoption by others. This will result in an expansion of the regulated environment and can have significant cost impact on governments, industry and consumers.

6.3.4 There is a risk that the introduction of the Code, itself, may be seen as a bureaucratic exercise that has been designed to inhibit industry progress. This is a risk that results more through perception than reality and can be addressed through a comprehensive consultative process.

6.4 The benefits to Industry

6.4.1 Industry will benefit from the adoption of the Code because it contains all relevant regulatory requirements in the one document. On-site installation requirements will be more uniform and variations, although listed, will most likely be progressively culled. Those remaining will do so because of extenuating circumstances peculiar to a particular area or jurisdiction.

6.4.2 The provision of all regulatory requirements in one document will result in significant benefits to the industry that includes less restriction to the mobility of plumbers. It will foster interstate competitiveness as well as contribute towards better installation outcomes. Plumbers will benefit through increased market scope.

6.4.3 The validation of industry performance will be more uniform because of the use of a single yardstick, compliance with the Code. This in turn will provide a more meaningful validation of industry training performance. Industry will accrue significant benefits both in knowing how they perform individually and as a result of knowing how training institutions have performed.

6.4.4 The procedures for plumbing product certification will provide significant benefits as there will be multiple Certifying Bodies to choose from. The processes will be nationally consistent and transparent and the outcomes will be accountable. There will be benefits from competition between Certifying Bodies. Industry will find that the Plumbing Code of Australia is user friendly and compatible with the BCA and other standards and codes.



6.4.5 The availability of multiple Certifying Bodies will address some of the current difficulties by facilitating, clarifying and expediting the certification process.

6.4.6 The Plumbing Code of Australia will complement the BCA and provide clarification of the role that each plays.

6.5 The benefits to Government

6.5.1 Governments will benefit from improved cost efficiencies achieved through a national approach that the Code provides. The Plumbing Code of Australia provides a ready and complete reference for easy adoption by all jurisdictions.

6.5.2 The Code will be under continual review. Such reviews will be conducted in an environment where all issues pertinent to the implementation of the Code can be tabled. The outcome will be a document that represents national consensus.

6.5.3 The more meaningful validation of industry performance and its training performance will provide important information for the Federal Government in relation to its disbursements. This will result in greater efficiency in the utilisation of the national training budget.

6.5.4 A nationally consistent product approval process and its clear application will send the appropriate signals to industry for a level playing field within this country. Because manufacturers and agents, both local and overseas, will have a single point of reference for certification of their products, jurisdictions will benefit as a consequence of the more consistent, accountable and transparent outcomes.

6.5.5 Adoption of the Code will ensure that plumbing product certification will be based on the nationally agreed procedures. Jurisdictions need no longer to be concerned about substandard products claiming de facto approval through mutual recognition legislation because of their acceptance in some other jurisdictions.

6.5.6 The Plumbing Code of Australia will be a live document. Under the aegis of the National Plumbing Regulators Forum, it will function as a vehicle for national policy development and reform. Issues pertinent to energy and environmental conservation will be incorporated, as appropriate.

6.5.7 The development the Code has been conducted in consultation with those responsible for the BCA. As a result, the Plumbing Code of Australia will be a complementary document to the BCA. In this way, the respective roles of the BCA and the Code will be effectively clarified.

6.5.8 Initially, the individual jurisdictions would need to assess the regulatory impact of the Plumbing Code of Australia in accordance with their legislative requirements. The national Regulation Impact Statement (RIS) would assist them but overtime it is expected the national RIS would be sufficient for all jurisdictions. This will result in considerable savings nationally.

6.5.9 The Code contains regulatory requirements that are not necessarily applicable to all jurisdictions. This limitation is clearly identified in the document. There are significant benefits in that approach because preparation of the Code has been expedited and benefits to industry, governments and consumers can then accrue at the earliest possible time. There is also the advantage that, by their very nature, regulatory requirements that are not nationally agreed will be challenged on an on-going basis and face possible culling at each review.



6.6 The benefits to Consumers

6.6.1 The principle benefits to consumers are as a result of the improved regulatory outcomes.

6.6.2 Consumers can be confident in expecting and receiving greater uniformity and acceptable levels of service.

6.6.3 Consumers can benefit from cost efficiencies derived through the application of standards that are more accountable and transparent.

6.6.4 Consumers will be able to rely on the product certification mark as an indication that the product does not pose undue risks to themselves, others and the environment.

6.6.5 The competition between Certifying Bodies can result in cost savings being passed on from manufacturers or plumbers to consumers.

6.7 Net benefits

6.7.1 A comparison of the costs and benefits to the principal cost bearer groups and principal benefit receiver groups shows that the net public benefits exceed the dis-benefits.



7. ALTERNATIVE OPTIONS

7.1 The options

7.1.1 The following options have been identified as alternatives to the proposed Plumbing Code of Australia:

• no legislative control;

• maintaining the status quo; and

• a Code that is truly nationally consistent.

7.2 No legislative control

7.2.1 Historical events have shown that abandonment of legislative control will result in unacceptable risks to community, the environment and public infrastructure as imperfect markets exist. Because the focus of plumbing regulations has been to achieve effective protection of public health, safety, amenity, the environment and public infrastructure, this option is unacceptable.

7.3 Maintaining the status quo

7.3.1 Persisting with the current regulatory environment will mean the continuation of significantly disparate regulatory systems within the nation. The opportunities for improvement raised as a result of the Fisher Stewart Report will not be taken advantage of, including that of revitalising the plumbing product certification and authorisation scheme. It also means that the National Plumbing Regulators Forum will not be achieving the requirements as set out in Recommendation 4 of the Peter Laver Report. This is considered unacceptable.

7.4 Nationally consistent Code

7.4.1 Undeniably, a truly nationally consistent Code is the desired outcome. The National Plumbing Regulators Forum is cognisant of and will strive towards this target. However, the NPRF recognises that the task of developing and introducing a nationally consistent Code will span many years. A consequence of not introducing the Plumbing Code of Australia until national consistency has been achieved will be that significant benefits cannot be derived in the short term. All principal stakeholders will miss out on significant benefits summarised in Clause 6. This is unacceptable.



8. STATEMENT OF CONSULTATION PROCESS

8.1 National Consultation

8.1.1 The National Plumbing Regulators Forum maintains liaison with the Australian Building Codes Board, Australian Greenhouse Office, Water Services Association of Australia, Master Plumbers and Mechanical Services Association, National Council of Gas Regulators & National Council of Electrical Regulators. Consultations with these organisations will be further advanced once the draft Plumbing Code of Australia is available.

8.2 State Consultation

8.2.1 The consultation process on the preparation of the Code at State and Territory level has been through State and Territory regulator representatives meeting with industry groups or their representatives.

8.2.2 In Victoria, consultations have been conducted with the Plumbing Industry Advisory Council, Building Commission, Office of Chief Electrical Inspector and the Office of Gas Safety.

8.2.3 Consultation in South Australia has been or is planned with the Master Plumbers Association SA, TAFE, Planning SA, National Trade Waste Managers Forum, Environmental Surveillance Section of the Department of Human Services, Master Builders Association and Housing Industry Association.

8.2.4 In Western Australia, consultations have been conducted with the Master Plumbers and Gasfitters Association and the WA Plumber Licensing Board.

8.2.5 Consultation in the ACT has been with the Plumbers, Drainers and Gasfitters Board and the Master Plumbers, Drainers and Gasfitters Association in December 2001.

8.2.6 In Queensland, consultations have been conducted with a number of stakeholders, including plumbing and building industry associations, and local government.

8.2.7 Consultation in NSW has been or is planned with the Master Plumbers and Mechanical Contractors Association, TAFE, Planning NSW, Association of Hydraulic Services Consultants of Australia, Department of Land and Water Conservation, Sydney Water Corporation, Hunter Water Corporation and Department of Local Government. Informal consultations have also been conducted with a number of industry representatives.

8.2.8 Consultation in Tasmania has been with the Building Regulation Advisory Committee and the Plumbing Products Accreditation Committee. As Tasmania already has a performance-based Tasmanian Plumbing Code consultation has been restricted but will be increased when the Draft Code is available to discuss specifics.

8.2.9 A presentation was made to Austap Incorporated at its General Meeting in Sydney in February 2002.


8.2.10 A more concerted and comprehensive consultation program will be embarked upon by representatives of each jurisdiction once the draft Plumbing Code of Australia becomes available.



8.3 Responses

8.3.1 Preliminary responses have indicated widespread support for the principles underpinning the Code.

As 2006 Plumbing Code Regulation

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