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: heather.raux@pic.vic.gov.au
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
3.2
3.3
3.5
Need for change............................................................................................................................. 7

National systems reform ................................................................................................................ 7
Fisher Stewart Report ................................................................................................................... 8
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
5.2
5.3
5.4
5.5
5.6
5.7
5.8
5.9
Introduction ................................................................................................................................. 12
Summary of objectives ................................................................................................................. 12
What are the relevant markets?................................................................................................. 123
What are the boundaries of the markets? .................................................................................... 13
What constitutes market failure? ................................................................................................. 14
What market failures does the PCA address?.............................................................................. 14
Market intervention potential of the PCA ................................................................................... 15
What are the potential restrictions on competition?.................................................................... 16
Impact on business ...................................................................................................................... 16
6. QUALITATIVE COST BENEFIT ANALYSIS OF ADOPTION OF THE CODE........... 17

6.1
6.2
6.3
6.4
6.5
6.6
Potential costs and benefits ......................................................................................................... 17

Summary of principal costs and benefits ..................................................................................... 18
The costs ..................................................................................................................................... 19
The benefits to Industry ............................................................................................................... 19
The benefits to Government ......................................................................................................... 20
The benefits to Consumers........................................................................................................... 20
7. ALTERNATIVE OPTIONS ............................................................................................... 22

7.1
7.2
7.3
7.4
The options .................................................................................................................................. 22

No legislative control .................................................................................................................. 22
Maintianing the status quo ......................................................................................................... 22
Nationally consistent PCA .......................................................................................................... 22
8. STATEMENT OF CONSULTATION PROCESS ............................................................. 23

8.1 National Consultation.................................................................................................................. 23
8.2 State Consultation ....................................................................................................................... 23
8.3 Responses .................................................................................................................................... 23
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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 operators
infrastructure, water resources and the environment which, at the same time,
encourages the conservation of water and energy resources.
1
2
Fisher Stewart Report: On Site Plumbing Regulatory Framework Commonwealth

Department of Industry Science and Resources (http://www.isr.gov.au/industry/building/)
Review of the Australian Building Codes Board Commonwealth Department of Industry
Science and Resources (http://www.isr.gov.au/industry/building/)
page 3
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 ongoing 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 disbenefits.
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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).
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(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.
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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.
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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
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(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.
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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-tosatisfy 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.
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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.
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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.
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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, subcontractors) 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
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a property are influenced by the applicable standards at the time as well as any timerelated 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 onsite 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
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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
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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 interrelated 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.
page 16
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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
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.
BENEFITS
Cost efficiencies in regulatory

arrangements.
Improved regulatory outcomes.
Significant advance towards nationally
uniform regulatory outcomes.
More meaningful validation of industry
performance.
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.
page 17
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.

jurisdictions.

performance.
Transparent product certification process
with associated improvements.
associated cost efficiencies.
Plumbing Code.
Government

jurisdictions.
Cost efficiencies in regulatory

arrangements.
performance.
Greater efficiency in the utilisation of
national training budget
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
page 18


020427_1.doc
COSTS
jurisdictions.
BENEFITS
6.3
associated improvements and cost

efficiencies.
Nationally consistent thrust towards
protection of water utilities infrastructure
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.
page 19
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.
page 20
020427_1.doc
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 disbenefits.
page 21
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.
page 22
020427_1.doc
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.
page 23
8.3
Responses
8.3.1 Preliminary responses have indicated widespread support for the principles
underpinning the Code.
page 24

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REGULATION IMPACT STATEMENT

Comments on this RIS should be sent to:

Regulatory Impact Statement Plumbing Code of Australia

Need for change............................................................................................................................. 7

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

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

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

Potential costs and benefits ......................................................................................................... 17

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

The options .................................................................................................................................. 22

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

National Plumbing Regulators Forum

Regulatory Impact Statement Plumbing Code of Australia

Fisher Stewart Report: On Site Plumbing Regulatory Framework Commonwealth

National Plumbing Regulators Forum

Regulatory Impact Statement Plumbing Code of Australia

The Code introduces a nationally coordinated and holistic approach to an otherwise

National Plumbing Regulators Forum

Regulatory Impact Statement Plumbing Code of Australia

Regulatory Impact Statement Plumbing Code of Australia

(The Laver Report is available from the Commonwealth Department of Industry

National Plumbing Regulators Forum

Regulatory Impact Statement Plumbing Code of Australia

Need for Change

National Systems Reform

Regulatory Impact Statement Plumbing Code of Australia

Fisher Stewart Report

National Plumbing Regulators Forum

Regulatory Impact Statement Plumbing Code of Australia

Peter Laver Report

National Plumbing Regulators Forum

Regulatory Impact Statement Plumbing Code of Australia

4. THE PLUMBING CODE OF AUSTRALIA

Scope of the Code

National Plumbing Regulators Forum

Regulatory Impact Statement Plumbing Code of Australia

Plumbing Code of Australia Intended Application

National Plumbing Regulators Forum

Regulatory Impact Statement Plumbing Code of Australia

5. RESTRICTION ON COMPETITION AND IMPACT ON BUSINESS

5.1.1 Any analysis of restrictions on competition requires an understanding of the

What are the relevant markets?

5.3.1 The Plumbing Code of Australia is potentially relevant to those markets

National Plumbing Regulators Forum

Regulatory Impact Statement Plumbing Code of Australia

What are the boundaries of the markets?

5.4.1 A market is essentially an arrangement in which goods and services are

the product aspect

Regulatory Impact Statement Plumbing Code of Australia

What constitutes market failure?

What market failures does the Plumbing Code of Australia address?

National Plumbing Regulators Forum

Regulatory Impact Statement Plumbing Code of Australia

minimise inconsistency between regulatory regimes, lack of accountability and

Market intervention potential of the Code

5.7.1 Regulatory inconsistencies Currently, the absence of a national industry code

Regulatory Impact Statement Plumbing Code of Australia

What are the potential restrictions on competition?

5.9.1 Market failure may result in an impact on business or an impact on the

National Plumbing Regulators Forum

Regulatory Impact Statement Plumbing Code of Australia

6. QUALITATIVE COST BENEFIT ANALYSIS OF ADOPTION OF CODE

Potential costs and benefits

Change to the existing regulatory template.