Part 8: Fees and charges

Inquiry into the Plumbers, Gasfitters, and Drainlayers Board: Follow-up report.

Section 142 of the Act allows the Board to charge fees for registration applications, licences, applications for exemptions, examination fees, and any other matter that the Board must do to carry out its functions. A separate provision under section 143 allows it to charge a disciplinary and prosecution levy to fund:

  • investigations into allegations or complaints about registered tradespeople;
  • disciplinary proceedings against registered tradespeople; and
  • investigations into, and prosecution of people for any breach of any part of the Act or regulation relating to unauthorised plumbing, gasfitting, and drainlaying work.

Our 2010 inquiry identified several problems with how the Board accounted for its expenditure and the basis for calculating the fees that it charged tradespeople.

Summary of progress

For our follow-up work, we mainly focused on the fees and charges review of 2012. In summary, we found that the Board had given serious attention to the setting of fees and charges, and had taken account of good practice guidance. However, we encourage the Board to systematically consider the combined effect of its fees and charges on tradespeople. Fees and charges are high compared to other boards that regulate tradespeople.

In 2010, we made one recommendation about fees and charges. Figure 8 summarises the progress against this recommendation, with further detailed findings in paragraphs 8.5-8.20.

Figure 8
The Board's progress in addressing Recommendation 13

We recommended that the Plumbers, Gasfitters, and Drainlayers Board:Progress by the end of 2013Relevant paragraphs in this report
13 … maintain and embed a practice of reviewing all of its fees and charges against the good practice guide, Charging fees for public sector goods and services, to ensure that it is budgeting and setting fees in keeping with its legal authority and good practice expectations. Complete 8.5-8.20

Reviewing fees and charges

The Board hired a globally recognised consultancy to analyse its expenditure and income before the review of fees and charges in 2012. In our view, the Board consulted appropriately about its proposals.

The fee review considered our good practice guide, Charging fees for public sector goods and services. In that guide, we say:

The entity should have a system in place to collate the cost information. The type of systems developed should take account of the context and should be in proportion to the level of revenue and costs that the entity needs to track. In identifying the resources, and hence the cost, involved in providing the forecast volume of goods or services, the entity has to use the best information available to it and make reasonable assumptions about prospective information.

The Plumbers, Gasfitters, and Drainlayers Federation (the Federation) is unhappy that staff and Board member time is not measured more precisely. However, we think that diminishing improvements in accuracy can be gained, relative to the costs of getting improvement. The bigger problems we identified in 2010 were that the Board:

  • was charging more for some activities than it cost to do them;
  • was not keeping the income raised from the disciplinary levy and offences fee separate from the Board's other income; and
  • had increased fees and charges significantly since 2007.

For example, in 2010, we noted that the Board was setting some fees and charges that seemed to be significantly more than the costs of providing those services. The Board went on to register a surplus in the next set of accounts. The Board has addressed this matter by setting its fees to recover costs only.

The 2012 fee model builds in use of the surplus income that the Board collected in previous years. The Board has moved to a three-year projection and this should avoid large fluctuations in fees from one year to the next, while reducing the level of reserve funds that it holds.

The Board has now introduced memorandum accounts for the money it collects from the disciplinary levy and the offences fee. This also improves transparency, by showing that income from the disciplinary levy and the offences fee is spent only on those activities.

Changes to legislation mean that the Board no longer receives income from gas certification. In 2010, we had concerns that the Board used income from this source to pay for other activities that it carried out, but this is no longer a risk. However, loss of the income has increased pressure on the Board's finances.

In our 2010 report, we discussed how fees had increased since 2007. In the overview to that report, the Auditor-General said:

In any regulatory context, it is too hard to achieve high levels of compliance through force or coercion – effective systems rely on people choosing to participate and follow the rules.

Although there is no legal requirement to take costs into account when setting fees, in our view, the Board should do so. We have noted the progress the Board has made in the mechanics of setting fees and charges. However, after looking at the agendas and minutes of Board meetings over an 18-month period, we concluded that the Board did not routinely discuss the effect of its policies, fees, and charges on tradespeople.

The Auditor-General receives a number of complaints each year from plumbers, gasfitters, and drainlayers. Although we cannot investigate individual complaints, we do use information that complainants have given us to look at the bigger picture. Many of the complaints we receive are directly or indirectly about costs.

We looked at the Board's registration and licensing costs and compared them to three other occupational registration and licensing boards. These boards cover electrical workers, people working in the building industry, and nurses. The full details are shown in the Appendix.

Our analysis shows that costs are higher for plumbers, gasfitters, and drainlayers compared to joiners, electricians, and nurses. The main reasons for this are:

  • The Board registers fewer people, and issues significantly fewer licences that the other Boards. This means their fixed costs, like their registration database, are spread over fewer people.
  • The Board's disciplinary levy is high. This is partly because the Act requires the Board to appoint investigators for every complaint it receives.8 If the investigator thinks that the complaint should be considered by the Board, the Act requires that five Board members must hear it.
  • The Board is unique in having to charge tradespeople, by way of the offences fee, for the costs of prosecuting people doing unlawful plumbing, gasfitting, or drainlaying.
  • The Board receives no funding from the Government,9 either from general taxation or levies. This is different to the Electrical Workers Registration Board and the Building Practitioners Board.

Now that the Board has a better understanding of its costs and expenses, we think it could be more innovative in how it approaches its regulatory role. For example, linking continuous professional development, competence review and licensing periods could potentially bring savings for the Board and for tradespeople. Our analysis showed that the Electrical Workers Registration Board had moved to a two-year licence period, and the Board has discretion to do something similar.

However, it is questionable whether such changes will bring big enough savings. In the December 2013 issue of Info Brief, the Board Chairman said:

While the Board has reduced its overall operating costs, it suffers from a lack of economies of scale. I have advocated for the amalgamation of the three trade occupational licensing boards. In my view, that is the best way to reduce the costs.

This demonstrates that the Board faces challenges to properly regulate and comply with the Act at a cost that is reasonable for the sector.

MBIE is working on a wider review of occupational registration and licensing. Additionally, we saw that the Board's business plan contained an action to progress discussions on joining with other boards, but in two years nothing had happened.

8: Except if they are deemed frivolous or vexatious.

9: The Board did receive a one-off contribution of $55,000 to help it implement the Act.

page top