This was done to ensure there was consistency of approach across government, and that the “intervention logic” would be consistently applied.
Generally, governments don’t like to intervene in such matters, but when they need to, benefits should always exceed the cost, and the intervention kept to a minimum.
So how does this work?
Essentially there are five decision-making steps:
Step 1: Identify whether intervention in an occupation is necessary:
• Consider the nature of the risk from the occupation.
• The probability of significant irreversible harm.
• The availability of other means of handling risk (eg, insurance).
If significant irreversible harm is likely, there is a case for intervention in the practice of the occupation.
Step 2: Identify whether intervention by the Government is justified:
• Consider existing means of protection for consumers (eg, civil law, consumer legislation).
• Consider ability of industry to regulate itself.
• Consider effect of intervention by the Government.
If significant harm is likely, existing protective means are insufficient, industry is unable to self regulate, and government intervention would improve outcomes, then there is a strong case for government intervention.
Step 3: Identify most effective form of government intervention:
• Consider the nature of the problem posed and how it might be resolved by:
• Provision of information.
• Training of practitioners.
• Setting and enforcing standards.
• Specifying services Government will purchase.
• Legislation regulating the practice of occupation?
If only a specific aspect of the occupation poses a threat, the best solution is to target that aspect rather than legislate to regulate the occupation.
Step 4: If legislation is required what form of regulatory regime is needed?
• Disclosure — requires disclosure of information about the service or service provider.
• Registration — requires practitioners to identify themselves in a public way (eg, on a register).
• Certification — distinguishes particular types of service from others through protecting titles (eg, “Chartered” Accountant, “Registered” Valuer – as opposed to Accountant and Valuer).
• Licensing — via restricting particular tasks, and controlling who can enter the occupation.
Step 5: What legislative provisions are needed to regulate the occupation?
Licensing is the heaviest form of government occupational regulation — the most “interventionist”.
Licensing workers in an occupation imposes costs and reduces flexibility more than any other means of control, and should be reserved for occupations where there is a high need for control for safety reasons and where all other methods would be inadequate. That is why governments don’t do such things lightly.
The other reason, of course, is it creates a monopoly which governments don’t like either. Once such a regime is in place, the recipients of that regime generally fight tooth and nail to retain it as losing it opens the occupation up to competition and limits its ability to maintain or hike fees.
It does interest me that the building sector has, indeed, self regulated since 1821 (when New Zealand’s first house was built — Kemp House — nearly 200 years ago).
Self regulation is where an industry has Codes of Practice — eg, training standards, self monitoring and/or voluntary accreditation systems — like the Registered Master Builders Federation which imposes entry standards and criteria upon membership.
Yet, it is only now that the Government has deemed it necessary to regulate the building occupation, and then, only the residential sector due primarily to the leaky homes saga.
If we had the LBP scheme in the 1990s it wouldn’t have stopped leaky buildings because so many other things in the “system” were also broken.
The world has changed most rapidly since the late 1980s, and construction is a much more complex and litigious occupation. Do you think we will ever return to those self-regulatory days?
Mind you, we don’t start being “regulated” until March 1, 2012, so we are, indeed, still self-regulating. But there are greater changes afoot relating to the realignment of accountabilities and “rebalancing” the system, and the LBP scheme has a role to play in all that.
At Registered Master Builders we fully support the LBP scheme. It is just too easy for anyone to pick up a hammer and call themselves a builder.
Consumers are, fundamentally, infrequent purchasers of our services (and therefore uninformed), so rely heavily on the capability, honesty and trust of the builders they engage to invest their life savings with.
The LBP scheme will reduce the ability of the non-skilled being widely engaged, and should lift the quality of workmanship.
However, it is just one piece of the jigsaw, and we must get the other pieces fitting right together also.