National Licensing What’s Next?

Assembling a proposal for the reform of any industry sector is always a challenge, especially when the outcome of that proposal receives widespread criticism and almost universal condemnation. Such has been the outcome of the proposals for a national licensing scheme for the real estate sector.

A dogged determination to achieve a particular outcome – for the sake of achieving a particular goal – is an admirable trait in a sporting context, perhaps. When such determination is directed at a significant industry reform, it is important (indeed, some would say, critical) to the success of such an ambition that there is industry buy-in to the ambition and a clearly articulated industry benefit.

Undertaking a national ‘road show’ to explain a poorly researched and ill-considered Regulatory Impact Statement and attempting to dress it up as a ‘consultation process’ (and then releasing the Draft Legislation before that ‘consultation process’ is completed) would seem to suggest a thinly-veiled contempt for the views of those being consulted.

There have been consultations with regulators across the country who have failed to regulate their industry; with industry representatives who don’t necessarily represent the views of their members; with training providers who are out of touch with the training needs of the industry in which they operate; and with other stakeholders who seem to have a rather tenuous connection to, and an even more tenuous understanding of, the mechanics of government and the particular constitutional arrangements which govern the industry.

There have been (perhaps cynical) suggestions that the intent may well be to ensure the maintenance of the status quo. This is because what has happened is that, rather than gaining the support for what is, essentially, a sensible and practical improvement, hysterical opposition is goaded into action to mount a plethora of dubious arguments against the ill-conceived proposals and embark on a concentrated, coordinated campaign to discredit a fundamentally flawed offering.

The discussions around a consistent National Licensing System have been hijacked away from the merits of such a scheme – which would free up cross border trading and simplify the system to allow the free-flow of skilled operatives to function in multiple jurisdictions.

The harmonisation of consistent legislation for the functions of agency work across the country is a ‘next step’ in this process. There are complex constitutional issues surrounding this whole regulatory review. The ‘conduct’ issues of the property sector (the way agents do their job and the penalties if they don’t) are the preserve of the State and Territory jurisdictions.

State Governments do not transfer powers to the Commonwealth easily. They usually only do so if there is a clear economic or security imperative. No such imperative exists at present.

To expect State and Territory regulators (let alone legislators or industry representative bodies) to agree to harmonised legislation without such imperatives, in the current political circumstances, is naive.

There is no clear political advantage, to either side of politics, at either State or Federal level, to drive such a significant change in the way the property industry functions. Until such an advantage is articulated and gains much broader support, harmonisation of legislation in the property sector is unlikely to be high on any political agenda.

That such strident objections from a diverse range of industry groups and individuals have been made should be sufficient for the proponents of the RIS and the Draft Legislation to give pause, recognise the shortcomings in them and, if not start all over again, at least put any implementation timetable on hold whilst they consider the objections in detail, consult more broadly than they have thus far, and adopt a more balanced approach to achieve an outcome that will have, at least, some industry support.

The one group for whom national licensing makes the most sense – commercial, industrial and retail agents – is to be ‘deregulated’ under the RIS proposal. The committee found it too difficult to define, so opted to leave it out altogether! In so doing, a whole raft of investors – in fact, the great majority of investors in commercial property – will have no specific protection under real property legislation. That is a serious abrogation of responsibility for consumer protection by those responsible for the RIS and the Draft Legislation – and all because they found it too difficult to come up with a workable definition!

It seems, from the consultations thus far, there is widespread industry support for the notion of professional development for property agents, despite the recommendation that it NOT be included in any national licensing system.

The challenge for the regulators is to devise a workable, practical and relevant system which ensures industry operatives maintain currency with legislative and regulatory changes, whilst also providing some flexibility for agents to enhance their skills and knowledge across a range of delivery options relevant to their particular industry sector.

To not have a CPD component under the national licensing regime is an acknowledgement that the regulators do not have the wherewithal to devise a valid, worthwhile scheme for ensuring and improving the professionalism of the industry which they supposedly control and monitor.

It is a ‘surrender’ to the cowboys, and a concession of their abject failure to enhance the industry they purport to oversee in order to protect the consumer.

No one is suggesting it is easy to come up with a program which is going to satisfy all stakeholders. However, much of the opposition would be minimised if there was broader consultation before coming up with the proposals which seem to be ill-considered, irrelevant and based on some fairly spurious claims of industry benefit.

A clearer explanation of the need for a national licensing system, some clarity around the purpose of implementing it, and some appreciation of the peculiar diversity of the property industry would have saved a lot of the back-tracking that is now required.