Plumbing and Drainage Regulation 2012

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1 Regulatory Impact Statement Subordinate Legislation Act 1989 Plumbing and Drainage Regulation 2012 A regulation under the Plumbing and Drainage Act 2011 April 2012

2 Enquiries to: NSW Fair Trading Policy and Strategy Phone: Submissions to: Plumbing and Drainage Regulation 2012 NSW Fair Trading Department of Finance and Services PO Box 972 PARRAMATTA NSW 2124 Fax: (02) Final date for submissions: 4 May 2012 Additional copies of this Regulatory Impact Statement and the proposed Regulation can be downloaded from the Fair Trading website at n/plumbing_and_drainage_regulation_2012_invitation_to_comment.html or by calling Fair Trading on (02) State of New South Wales through NSW Fair Trading, 2012 You may copy, distribute, display, download and otherwise freely deal with this information provided you attribute NSW Fair Trading as the owner. However, you must obtain permission from NSW Fair Trading if you wish to 1) modify, 2) charge others for access, 3) include in advertising or a product for sale, or 4) obtain profit, from the information. Important: For full details, see NSW Fair Trading s copyright policy at or

3 TABLE OF CONTENTS 1. INTRODUCTION TITLE AND PROPONENT OF THE PROPOSED REGULATION WHY IS THE REGULATION BEING MADE? STATUS OF THE PROPOSED REGULATION WHAT IS THE PURPOSE OF THIS REGULATORY IMPACT STATEMENT? BACKGROUND PLUMBING REFORMS IN NSW OBJECTIVES OF THE PROPOSED REGULATION OPTIONS TO ACHIEVE OBJECTIVES CRITERIA USED TO ASSESS THE REGULATORY OPTIONS REGULATORY FRAMEWORK IMPACT ASSESSMENT OF THE PROPOSED REGULATION IMPACT OF INDIVIDUAL CLAUSES OF THE PROPOSED REGULATION Part 1 Preliminary (clauses 1 to 3) Part 2 Plumbing and drainage work requirements (clauses 4 to 10) Part 3 Exemptions (clauses 11 to 12) Part 4 Miscellaneous (clauses 13 to 15 and Schedules 1 and 2) OVERALL IMPACT OF OPTION 3: THE PROPOSED REGULATION IMPACT ANALYSIS OF THE ALTERNATIVES TO THE REGULATION OPTION 1: DO NOTHING OPTION 2: RELY ON THE INDUSTRY TO SELF REGULATE CONCLUSIONS CONSULTATION APPENDIX A: Proposed Plumbing and Drainage Regulation

4 1. INTRODUCTION 1.1 Title and proponent of the proposed regulation The Plumbing and Drainage Regulation 2012 is proposed by the Hon Anthony Roberts MP, Minister for Fair Trading. 1.2 Why is the regulation being made? The Plumbing and Drainage Act 2011 was passed by Parliament on 9 November The Act transfers responsibility for the regulation of on-site plumbing and drainage work from water utilities and local councils to NSW Fair Trading and requires compliance with prescribed standards for plumbing and drainage. Before the new Act can commence, supporting regulations must be drafted to prescribe the necessary administrative detail to enable the new Act to operate efficiently and effectively. 1.3 Status of the proposed regulation The proposed Regulation is a consultation draft. The Regulatory Impact Statement is being released together with the draft regulation so that stakeholders and interested parties can consider the proposed provisions and submit comments. The consultation draft may be amended to take into account suggestions made or issues raised in submissions, prior to finalisation. Notice of the making of the new regulation will be published on the NSW Legislation website ( before the final regulation comes into effect. 1.4 What is the purpose of this Regulatory Impact Statement? The Subordinate Legislation Act 1989 provides the framework and rules by which regulations are made in NSW. The Act s primary objective is to reduce unnecessary regulation by Government. A key requirement of the Act is that a Regulatory Impact Statement be prepared and public consultation undertaken before a new regulation can be made. The Regulatory Impact Statement explains the purpose of the proposed regulation, weighs up the economic and social impacts, and considers other possible options to meet the aims of the proposed regulation. The Regulatory Impact Statement must demonstrate that the proposed regulation is the option which, on balance, provides the greatest overall benefit to the public. The Regulatory Impact Statement procedure aims to ensure that the regulation: is the most efficient and effective way of achieving the policy objective of the legislation; and imposes minimum costs on the community or produces an outcome where the expected benefits outweigh the expected costs. The Regulatory Impact Statement must: state the objectives of the proposed regulation and the reason for them; identify alternative options by which those objectives might be achieved; assess the costs and benefits of each alternative - this assessment must consider the alternative of not taking any action; assess which of the alternatives will bring about the greatest net benefit or the least net cost to the community; and outline the consultation program to be undertaken. The impact of a proposed regulation is generally expressed in terms of: cost-benefit analysis of the options, where the costs and benefits flowing from the regulation can be measured in monetary terms; or 2

5 cost effectiveness analysis, where the costs and benefits of alternative means of achieving the regulation s objectives are compared, although the costs and benefits are not evaluated in monetary terms. 2. BACKGROUND 2.1 Plumbing reforms in NSW In June 2009, the Better Regulation Office and NSW Office of Water published the report Reforming arrangements for regulating plumbing and drainage in NSW. The report found that the current system is complex, fragmented and inflexible. The report recommended a number of reforms, including establishing NSW Fair Trading as the single plumbing regulator in NSW, and the adoption of the Plumbing Code of Australia as the technical standard for on-site plumbing and drainage work in NSW. In November 2011, the NSW Parliament passed the Plumbing and Drainage Act 2011, which gave effect to the Better Regulation Office recommendations. The new legislative framework will be introduced in two phases. From 1 July 2012, all requirements of the Act will commence in full in the Sydney Water Corporation and Hunter Water Corporation operational areas. Part 2, Division 1 of the Act will also commence across NSW, requiring plumbing and drainage work: to be carried out only by authorised persons; to comply with the Plumbing Code of Australia; and to use only authorised (WaterMark) fittings. From 1 January 2013, the other requirements of the Act will commence in the remainder of NSW and the plumbing regulator will delegate regulatory powers back to local governments, where appropriate. When the Act commences in each area, plumbers carrying out plumbing and sanitary drainage work will be required to: provide a notice of work at least 48 hours before starting any plumbing work, unless the work is of a nature that is exempt from this provision (emergency works or minor works); carry out the work in accordance with prescribed codes and standards; complete a certificate of compliance to certify that work done complies with the relevant codes and standards prescribed; use authorised materials and fittings only; supply a plan of sewerage work, after any sewerage work is completed, to the land owner and either NSW Fair Trading or, if delegated, the local council; and make the work available for inspection as required. The Act establishes a mandatory inspection scheme, similar to those currently provided by network utility operators. Under the scheme, NSW Fair Trading (or the delegated local council) will inspect work for compliance with prescribed codes and standards as appropriate and issue rectification orders for defective work where necessary. As the scheme commences in each area, the plumbing regulator (NSW Fair Trading or the delegated local council) will: receive and store information about work; be able to provide information to network utility operators and other relevant persons; have powers to exempt a person from certain legislative requirements; authorise materials and fittings or recognise authorisations issued by other approval bodies; undertake administrative activities such as collecting fees and approving forms; and 3

6 be able to commence legal proceedings, issue penalty notices and seek injunctions to prevent plumbing work or sanitary drainage work which is an immediate risk to health and safety. Copies of the Act can be viewed or downloaded from the Parliamentary Counsel s Office web site at: 3. OBJECTIVES OF THE PROPOSED REGULATION The objectives of the Plumbing and Drainage Regulation 2012 are: to prescribe various periods within which certain notifications under the Plumbing and Drainage Act 2011 are to be given in relation to the carrying out of plumbing and drainage work; to prescribe the period within which compliance certificates are to be issued for plumbing and drainage work; to require certain information to be provided to the plumbing regulator in relation to plumbing and drainage work involving alternative solutions under the Plumbing Code of Australia; to prescribe exemptions from certain provisions of the Act in relation to the carrying out of minor plumbing and drainage work and plumbing and drainage work carried out by employees of network utility operators; to prescribe certain offences under the Act as offences for which penalty notices may be issued; and to prescribe fees payable under the Plumbing and Drainage Act. 4. OPTIONS TO ACHIEVE OBJECTIVES Three options for achieving the above objectives are considered in this Regulatory Impact Statement: Option 1: Do nothing Option 2: Rely on the industry to self-regulate Option 3: Make the proposed regulation This option would mean that the Plumbing and Drainage Act 2011 would operate without any accompanying regulation. This option would place the onus on industry to establish a voluntary code of practice regulating those issues that the Plumbing and Drainage Regulation deals with. This option would enable the Plumbing and Drainage Act 2011 to operate with the regulation to provide the required administrative detail for the operation of the Act. This is the preferred option. 5. CRITERIA USED TO ASSESS THE REGULATORY OPTIONS The following criteria, which relate to the regulatory objectives, are used in the evaluation of the three options: 1. the extent to which the proposed option supports the objectives of the Plumbing and Drainage Act 2011; 2. the extent to which the proposed option provides an incentive for accountable and safe business practices by plumbers in NSW; 3. the cost effectiveness of each option, in terms of costs and benefits to consumers, industry and government; and 4. the extent to which the option contributes to the overall efficiency of the regulatory system. 4

7 6. REGULATORY FRAMEWORK The proposed regulation provides the administrative detail to enable the intent of the Plumbing and Drainage Act to be realised. The scope of any regulation is limited by the regulation making powers provided under the enabling legislation in this case the Plumbing and Drainage Act The regulation making powers of the Act and the scope of the proposed regulation are summarised in Table 1 below. Table 1 Power provided by the Act Section of Act Scope of the proposed regulation Clause of regulation Power to prescribe any other type of construction or work declared by the regulations to be plumbing and drainage work. 4(1)(e) None prescribed. Power to prescribe additional work that is excluded from the definition of plumbing and drainage work. Power to prescribe that the responsible person must ensure that plumbing and drainage work complies with other standards or requirements in addition to the Plumbing Code of Australia. Power to prescribe period within which notice of work must be given to plumbing regulator before work is carried out by responsible person. Power to prescribe period within which to give notice of emergency work, in an approved form, to the plumbing regulator by the responsible person. Power to prescribe period for notification of defective installation or system by the responsible person to the owner/occupier of land and/or the plumbing regulator on discovering the defective installation or 4(5) None prescribed. 7(1) None prescribed. 9(3) Provides that a notice of work must be given: (a) no later than 21 days before the work concerned is carried out in the case of work that is an alternative solution, or (b) no later than 2 days before the work concerned is carried out in any other case. 10(3) Provides that the period within which notice of emergency work must be given is 2 days after the work is carried out. 11(1) (2) Provides that the period within which notice of any defective installation or system must be given is 2 days after the responsible person becomes aware of the defective installation or system. Clause 4 Clause 5 Clause 6 5

8 Power provided by the Act Section of Act Scope of the proposed regulation Clause of regulation system. Power to prescribe a fee for inspections of plumbing and drainage work by the plumbing regulator. Power to prescribe period within which responsible person must notify plumbing regulator when plumbing and drainage work will be ready for inspection by the plumbing regulator. Power to prescribe the period within which a certificate of compliance of plumbing and drainage must be given to the regulator and contract party after work is completed. Power to prescribe the period within which a plan or copy of a plan is required to be supplied to another person. Power to make provision for exemptions in Part 2 of the Act in relation to specified kinds of plumbing and drainage work or specified persons from any specified provisions in this Part. 12(3) Provides the list of fees payable for inspections. 13(1) Provides that the period within which the responsible person must notify the plumbing regulator that the plumbing and drainage work is ready for inspection is two days after the work is completed. 15(1) (2) Provides that the period within which the responsible person must give a certificate of compliance (or a copy) for plumbing and drainage work is 2 days after the work is completed by the person or in the case of a contractor must be given 2 days after the contractor receives a copy to the owner of the premises or the owner s agent. 16 (4) Provides that the period within which a plan of work (or a copy) that includes work on a sanitary drainage system must be supplied to the owner or the owner s agent and the plumbing regulator no later than 2 days after the work is completed. 18 Provides for exemptions from the operation of sections 9, 13 and 15 of the Act for the following plumbing and drainage works: (a) tap ware replacements, (b) replacement of fixtures such as a toilet, basin or the like, (c) replacement of an existing hot water system, (d) kitchen, laundry or bathroom renovations, provided no plumbing has been changed, (e) plumbing and drainage work to access a section of pipe work but only if the work is for the purpose of preparing a sewer service diagram and no other plumbing and drainage work undertaken. Provides for exemptions for an individual from the requirements of the provisions of Part 2 of the Act for plumbing and drainage work if: (a) the individual is an employee of a network utility operator, and (b) the work was carried out wholly on the network utility operator s water Schedule 1 Clause 7 Clause 8 Clause 9 Clause 11 Clause 12 6

9 Power provided by the Act Section of Act Scope of the proposed regulation Clause of regulation supply system, sewerage system or on-site wastewater management or treatment system. Provides for exemptions for an individual from the requirements of the provisions of Part 2 of the Act (except sections 6 and 7) for plumbing and drainage work if: (a) the individual is an employee of a network utility operator, and (b) the work was incidental to other work that was not plumbing and drainage work and was carried out in the course of the individual s normal duties for the network utility operator. Provides for no exemption for an owner or occupier of land who has control of a plumbing installation or a sanitary drainage system from the requirements of section 17 of the Act. Power to prescribe penalty notice offences and the amount of the penalty payable if dealt with under this section, and offences punishable by a penalty if not exceeding 20 penalty units. 41 (1) (2) (7) Provides for penalty notice offences and penalties and penalties payable by corporations which are listed in Schedule 2 of the proposed Regulation. Provides that if a reference to a provision in Column 1 of Schedule 2 restricts the operation of the offence to a specific kind of offence then the offence created is a prescribed offence only if it is specified or committed in the circumstances specified. Clause 14 Allows making of regulations for any matter that is required or permitted to be prescribed or is necessary or convenient to be prescribed for carrying or giving effect to the Act. Specifically, regulations may be made about: the fees payable, the requirements for carrying out plumbing and drainage work, the fees payable and methodology used, including maximum fees that may be charged, for setting the fees for functions delegated to local council, and creating offences punishable by a penalty not more than Sets out the fees payable for services provided by the plumbing regulator. Allows for the fees payable for the provision of services delegated to a council to be set by the council. Provides for additional requirements for plumbing and drainage work that involves alternative solutions where the responsible person for the work must give specified documents and information (as listed below) to the plumbing regulator together with the relevant notice of work: (c) a letter from the person for whom the work is being carried out stating that the person is aware that an alternative solution is being proposed to be used, (d) for work in respect of an installation that connects directly or indirectly with a network utility operator s water supply system, evidence that the network utility operator has given consent to the use of the Clause 13 Clause 10 7

10 Power provided by the Act Section of Act Scope of the proposed regulation Clause of regulation penalty units. alternative solution. A contractor to which this clause applies in relation to premises, and who is not the owner of the premises, must within 2 days of giving the letter stated above to the responsible person concerned, give a copy to the owner of the premises or the owner s agent. The plumbing regulator may, after receiving a notice of work give the responsible person for the work a written notice requiring the person to provide the following documents and information to the regulator as specified and within the time specified in the notice: (a) expert assessments of a type specified in the notice for the proposed alternative solution, (b) information of a type specified in the notice for qualifications of experts whose advice on the proposed alternative solution was relied upon, (c) information of a type specified in the notice as to the design and suitability of the proposed alternative solution. The responsible person for work to which this clause applies and receives the above notice must comply with the notice. Notice of work means a notice of work under section 9 of the Act for plumbing and drainage work or a notice under section 10 of the Act for emergency plumbing and drainage work. Allows for provisions of a savings or transitional nature following the enactment of the Act. Sch 1 (1) None prescribed. Power to prescribe a date as the start date for a provision of this Act, or of the Regulations, in a relevant utility area. Sch 1 (2) Provides that relevant utility area has the same meaning as in clause 2 of Schedule 1 of the Act but does not include the area of operation of the Hunter Water Corporation. Provides that 1 July 2013 is the prescribed start date for the provisions of the Act (other than the provisions referred to in clause 2(2) of Schedule 1) in a relevant utility area. Clause 15 8

11 7. IMPACT ASSESSMENT OF THE PROPOSED REGULATION A copy of the proposed regulation can be found at Appendix A to this Regulatory Impact Statement. 7.1 Impact of individual clauses of the proposed regulation Part 1 Preliminary (clauses 1 to 3) Provision Part 1 Preliminary cites the title of the proposed regulation (clause 1), specifies the proposed commencement date of 1 July 2012 (clause 2) and defines certain terms and phrases as used in the proposed regulation (clause 3). Costs and benefits of proposed clauses The provisions are machinery in nature and no costs arise from them. The clauses are necessary for the operation of the regulation Part 2 Plumbing and drainage work requirements (clauses 4 to 10) Periods within which notice must be given (clauses 4 to 6) Objective To prescribe various periods within which certain notifications under the Plumbing and Drainage Act 2011 are to be given in relation to the carrying out of plumbing and drainage work. Provision Clauses 4 to 6 prescribe the following timeframes for certain written notifications to be provided: 1. no later than two days prior to work commencing in the case of notices of work to be provided to the plumbing regulator; 2. within two days after work has been completed in the case of emergency work that has not been pre-notified; and 3. within two days after the discovery of a defective installation or system. Clause 4 is made under section 9 of the Act, which provides that a notice of work must be given to the regulator before the work is carried out and no later than as prescribed by the regulations. Clause 5 is made under section 10 of the Act, which provides that the responsible person for any emergency work that is not pre-notified must give the plumbing regulator notice of the emergency work, in an approved form, within the period prescribed by the regulations after carrying out the work. Clause 6 is made under section 11 of the Act which provides that: 1. the responsible person for plumbing and drainage work, within the period prescribed by the regulations, give written notice to the owner of the land or the occupier of the land (if the owner does not occupy the land), of any defective installation or system discovered in the course of carrying out the plumbing and drainage work; and 2. the responsible person for plumbing and drainage work carried out on land must, within the period prescribed by the regulations, give the plumbing regulator written notice of any defective installation or system on the land discovered in the course of carrying out the plumbing and drainage work that poses an imminent threat to public health or safety. 9

12 Costs Under the current legislative arrangements, plumbers are required to submit a permit to work prior to commencing any plumbing and drainage work. This provision replicates the current requirements in the Sydney Water Corporation area, where permits to work are required to be submitted at least two days prior to commencing work (although it is noted that there may be some operational discretion applied to this requirement). There is a cost to government in processing the prescribed documents, which would be partially offset by the payment of the inspection fees prescribed under clause 13. Benefits The benefits of clauses 4 to 6 are that they enable the plumbing regulator to be informed of what plumbing and drainage work is being conducted within a reasonable timeframe. Detail on the nature of the work allows the regulator to use a risk based approach to inspections and to maintain appropriate records to compare final work with proposed work at the time of inspection, ensuring that work has been done correctly and safely. The timeframes included in the regulation are consistent with those currently in place in the Sydney Water Corporation area. Alternative options The principal regulation requires that written notices be provided in the case of notices of work, emergency work and defective work within a specified timeframe. Not specifying a timeframe is therefore not an appropriate alternative. An alternative option would be to set a longer notice period. In the case of notices of work, this would place an increased burden on industry to plan their work in advance which may be difficult in some situations. In the case of emergency and defective work, longer time periods would create potential health and safety risks for the community. Another alternative would be for shorter timeframes (1 day or less) to be set. This would provide greater flexibility for industry in planning their work, but would not provide the plumbing regulator with adequate notice of planned work. In the case of emergency and defective work, a shorter timeframe would require plumbers to finalise written notifications in a very short period of time which is likely to create compliance difficulties for industry Period within which plumbing regulator must be notified when plumbing and drainage work is ready for inspection (clause 7) Objective To prescribe various periods within which certain notifications under the Plumbing and Drainage Act 2011 are to be given in relation to the carrying out of plumbing and drainage work. Provision Clause 7 prescribes that the responsible person for plumbing and drainage work must notify the plumbing regulator that the work is ready for inspection within two days of completing the work. Clause 7 is made under section 13 of the Act which provides that a responsible person for plumbing and drainage work must notify the plumbing regulator when the work will be ready for inspection by the plumbing regulator before, or within, the period prescribed by the regulations. Costs Under the current legislative arrangements, plumbers are required to notify the relevant regulator when work is ready for inspection. The timeframe for doing so included in the regulation is consistent with the current requirements in the Sydney Water Corporation 10

13 area. As such, the regulation does not create a new regulatory burden on industry. The cost of notifying the plumbing regulator when work is ready for inspection is not onerous as this can be done via a telephone call, as is the current practice. Benefits The benefits of this clause are that the plumbing regulator is advised of when work has been completed and will be ready for inspection within a reasonable timeframe, allowing to the plumbing regulator to plan inspections appropriately and ensuring that records of plumbing work are maintained in an effective manner. Alternative options An alternative option would be to set a longer specified timeframe within which the responsible person may notify the plumbing regulator of completed work. This would result in completed work being left unattended for longer periods of time which could pose health and safety risks to the community, particularly where pits or trenches are required to remain open until the inspection period is over. Another alternative option would be to set a shorter specified time within which the responsible person may notify the plumbing regulator of completed work (e.g. the same day the work is completed). This would increase the regulatory burden on plumbers compared to current practice and would place an unreasonable burden on them to ensure the notification occurs immediately. It would also restrict the regulator s capacity to efficiently plan and resource inspections Period within which a certificate of compliance or plan of work must be given (clauses 8 to 9) Objective To prescribe various periods within which certain notifications under the Plumbing and Drainage Act 2011 are to be given in relation to the carrying out of plumbing and drainage work. Provision Clause 8 prescribes the timeframe within which a certificate of compliance for plumbing and drainage work (or a copy of the certificate) must be provided to the plumbing regulator and the person for whom the work was carried out as within two days of the work being completed. If the person who contracted the plumber to undertake the work is not the owner of the premises, they must provide a copy of the certificate of compliance to the owner or the owner s agent within two days. Clause 8 is made under section 15 of the Act which provides for the regulations to specify timeframes for the provision of certificates of compliance. Clause 9 provides that if a plan of a sanitary drainage system has been prepared, either as part of plumbing and drainage work or in any other circumstances, a copy of the plan must be provided to the plumbing regulator and the owner of the land or the owner s agent no later than two days after the work is completed. Clause 9 is made under section 16 of the Act which provides that a plan or copy that is required to be supplied to another person under that section of the Act is required to be supplied no later than as prescribed by the regulations. Costs Under the current legislative arrangements, plumbers are required to submit certificates of compliance and sewer service diagrams within specified timeframes. The timeframes included in the regulation are consistent with the current requirements in the Sydney Water Corporation area. This provision does not impose any new costs on industry or 11

14 consumers. Plumbers will be able to submit their certificates of compliance and sewer service diagrams in person, via or postal mail (consistent with current arrangements) and as such the cost of submitting these documents will be minimal. Benefits A two day timeframe for submission of certificates of compliance and plans of sanitary drainage systems recognises that plumbers are not always able to complete paperwork immediately after finishing a job, while still ensuring the regulator and owner receive this information in a timely fashion. It is maintains consistency with other timeframes specified in the regulations. Alternative options An alternative option would be to set a shorter specified timeframe within which certificates of compliance and plans of sanitary drainage systems must be submitted, however this would be likely to create an excessive burden on industry and lead to widespread noncompliance. Another alternative option would be to set a longer specified timeframe within which within which certificates of compliance and plans of sanitary drainage systems must be submitted. This would result in the regulator and owners having to wait longer for these documents Additional requirements for alternative solutions (clause 10) Objective To require certain information to be provided to the plumbing regulator in relation to plumbing and drainage work involving alternative solutions under the Plumbing Code of Australia. Provision Clause 10 prescribes additional requirements for information to be provided with a notice of work for plumbing and drainage work that utilises an alternative solution as defined by the Plumbing Code of Australia. A notice of work for an alternative solution must be accompanied by the following documentation: a letter from the person for whom the work is being carried out indicating they are aware that an alternative solution is proposed to be used; evidence that the network utility operator has given consent to the use of the alternative solution (where it connects directly or indirectly with their water supply system); and evidence of suitability of the proposed alternative solution in accordance with the Plumbing Code of Australia. Clause 10 is made under section 52 of the Act which provides that regulations may make provision for or with respect to the requirements for carrying out plumbing and drainage work. Costs Under the current legislative requirements there is no provision for the use of alternative solutions. The introduction of the Plumbing Code of Australia will give developers, builders and plumbers the opportunity to make use of alternative solutions and as such provides them with increased flexibility. In order to comply with the Plumbing Code of Australia, the alternative solution must have evidence of suitability for use including a report from a recognised expert, a certificate from a professional engineer or other appropriately qualified person or other documentary evidence showing its suitability for use. The requirement in the regulation that this information be provided to the regulator along with a letter from the person for whom the work is being carried out and consent from the 12

15 network utility operator, will impose a low to medium administrative cost on industry. It should be noted however that alternative solutions are most likely to be utilised on large scale development projects and as such these documents are most likely to be sourced by the developer or builder and provided directly to the plumber for inclusion in the notice of work. It is not envisaged that alternative solutions will be used for everyday plumbing and drainage work. Government will also face a low to medium administrative cost, as the plumbing regulator will be required to review the documentation associated with all proposed alternative solutions to ensure they are consistent with the requirements of the Plumbing Code of Australia and that the consumer and network utility operators have been notified and/or consented to the use of the alternative solution. Benefits These requirements will ensure transparency for consumers as they will be made aware of the proposed use of an alternative solution. They will also provide protection for the assets of network utility operators by requiring their consent to connect to the water supply system. In addition, the plumbing regulator will be able to maintain comprehensive records of all proposed alternative solutions, ensuring there is sufficient information to be confident of the suitability of the design and that these installations are appropriately inspected. Alternative options An alternative option would be to rely solely on the requirements for alternative solutionscontained in the Plumbing Code of Australia. These requirements do not explicitly state that the evidence of suitability be provided directly to the plumbing regulator, nor do they require that the consumer or network utility operator be notified that an alternative solution is proposed. This option is therefore associated with significant risks that consumers, network utility operators and the plumbing regulator will not be aware when an alternative solution is being used, making it more difficult to confirm that health and safety issues have been adequately addressed Part 3 Exemptions (clauses 11 to 12) Exemptions for minor works (clause 11) Objective To prescribe exemptions from certain provisions of the Act in relation to the carrying out of minor plumbing and drainage work. Provision Clause 11 prescribes exemptions for certain types of work from sections 9, 13, and 15 of the Act (which relate to notice of work, inspection and certificate of compliance requirements of the Act). Exempted works must still comply with all other sections of the Act and as such will still need to be undertaken by an authorised person (that is, a licensed plumber) and must comply with the Plumbing Code of Australia. The activities to be exempted include: tap ware replacements (where these are not being done by the owner or occupier of a dwelling); replacement of fixtures such as a toilet, basin or the like; replacement of an existing hot water system; kitchen, laundry or bathroom renovations where the location of the fixtures has not changed; and plumbing and drainage work to access a sewer line through an inspection opening or similar opening for the purposes of preparing a sewer service diagram. 13

16 Clause 11 is made under section 18 of the Act which provides that the regulations may exempt specified kinds of plumbing and drainage work from any specified provision or provisions of Part 2 of the Act. Costs There are no identified costs associated with these exemptions. There is a potential cost to the plumbing regulator of not having oversight of these types of work, however this is considered appropriate given the low-risk and routine nature of the exempted work. Benefits Providing an exemption for specified low-risk types of plumbing and drainage work will reduce administrative and financial costs for consumers, industry and government. There will be no inspection fees required, which are usually paid for by consumers, and plumbers will not have to submit a notice of work, book an inspection or provide a certificate of compliance which will provide administrative and time savings. The exemption will allow the plumbing regulator to focus its regulatory powers on those activities that pose a high risk to the community and the environment. Alternative options An alternative option would be to establish a monetary threshold for exemptions (e.g. work of a value less than $500). There is however, no guarantee that work of a low-cost nature will always be work that also has low health and safety risks for the community, which could result in high risk work being exempt from the compliance and inspection regime of the Act. Another alternative option would be to have no exemptions included in the regulation which would mean that these types of work would technically be required to comply with all of the compliance and inspection requirements of the Act. This would be consistent with the current legislative requirements, although it is understood that compliance is an issue. Providing no exemptions would result in either a significant cost for consumers and industry, as inspection fees would need to be charged for these activities or there is potential for widespread non-compliance Exemption for employees of network utility operators (clause 12) Objective To prescribe exemptions from certain provisions of the Act in relation to plumbing and drainage work carried out by employees of network utility operators. Provision Clause 12 prescribes that individuals employed by a network utility operator are exempt from the notification, inspection and certificate of compliance requirements of the Act. Clause 12 is made under section 18 of the Act which provides that the regulations may exempt specified persons or classes of persons from any specified provision or provisions of Part 2 of the Act. Costs There are no costs associated with this exemption. Benefits Most work undertaken by network utility operator employees would not meet the definition of plumbing and drainage work under the Plumbing and Drainage Act 2011 and as such would not be required to comply with the Act. In some instances, however, a network utility operator employee may be required to undertake incidental work that would come under the jurisdiction of the Act (for example, work that crosses the point of connection). It is not intended that the plumbing regulator should oversee work that is primarily concerned 14

17 with the maintenance of a network utility operator s assets. By providing this exemption, the regulation places responsibility for this type of work clearly in the hands of the network utility operator, removing potential areas of conflict. This exemption does not apply to other plumbing and drainage work that is not incidental to asset maintenance, such as bathroom installations in office blocks or other properties that may be owned by the network utility operator. Alternative options An alternative option would be to not include any exemptions for network utility operator employees. This would mean that, if in the course of their work a network utility operator employee was required to undertake activities that met the definition of plumbing and drainage work as defined by the Plumbing and Drainage Act 2011, they would be required to submit a notice of work at least 2 days prior to commencing the work, to make the work available for inspection (and pay the relevant inspection fee), and issue a certificate of compliance to the regulator and their employer. Requiring the plumbing regulator to ensure compliance with these aspects of the Act, where the plumbing and drainage work is incidental to other work being undertaken on the network utility operator s assets, is considered overly onerous and has the potential to create conflict between agencies Part 4 Miscellaneous (clauses 13 to 15 and Schedules 1 and 2) Fees (clause 13 and schedule 1) Objective To allow NSW Fair Trading to regulate plumbing and drainage work on a cost recovery basis. Provisions Clause 13 prescribes the fees payable under the Act, which are set out in Schedule 1 of the Regulation. Clause 13 is made under section 12 of the Act which provides that the regulations may make provision for the fee payable for inspections by the plumbing regulator. Costs The new regulatory system is intended to be self-funding, that is, the costs of the compliance and inspection regime should be fully funded by the fees that are charged under the Regulations. NSW Fair Trading currently conducts plumbing inspection services on behalf of the Sydney Water Corporation and to date, the cost of running the compliance and inspection regime has not been fully met by the fees charged for inspection services in this area. However the total financial impact of the transfer will not be known until at least 12 months after the complete transfer of Sydney Water Corporation and Hunter Water Corporation activities has taken place. It is therefore proposed to utilise the fee levels currently in place in the Sydney Water Corporation area, with a view to reviewing the fee structure after twelve months of operation. The fees set out in Schedule 1 of the Regulation are consistent with those currently charged in the Sydney Water Corporation area of operation (with appropriate consumer price index increases). As such, there will therefore be no additional costs to industry currently operating in this area. For plumbers operating in the Hunter Water Corporation area, the fees represent a $31.68 saving per job for two inspections, based on current Hunter Water Corporation fees. Benefits Standardising fees across those areas to be directly regulated by NSW Fair Trading will ensure consistency and transparency for the new regulatory regime. 15

18 Maintaining current fee levels (indexed for cost of living increases) for the first twelve months of the new regulatory regime will give NSW Fair Trading time to establish the exact costs of the new regime and to develop options for a harmonised fee regime which achieves full cost recovery. Alternative options An alternative option would be for fees to be set at a higher level to immediately achieve full cost recovery based on current projections of industry activity and compliance. This would require fees increases of 21% across the combined Sydney Water Corporation and Hunter Water Corporation areas of operation. However, these may not accurately reflect the costs of the transfer of responsibility and could be either too high or too low Penalty notice offences and penalties (clause 14 and schedule 2) Objective To prescribe certain offences under the Act and the Regulation as offences for which penalty notices may be issued. Provision Clause 14 prescribes the penalty notice offences and relevant amounts payable, which are listed in Schedule 2 of the Regulation. Clause 14 is made under section 41 of the Act which provides that the regulations may prescribe an offence as a penalty notice offence and prescribe the penalty payable for the offence. Costs The penalty notice offences included in the Regulation reflect those that existed previously under the various pieces of legislation that governed plumbing and drainage work. The amounts payable are broadly reflective of the previous penalty amounts in current regulatory schemes. The maximum amounts payable for some offences have been reduced in recognition of the fact that the Plumbing and Drainage Act 2011 has a more restricted area of operation than water utilities legislation, particularly in relation to the potential for mass water contamination to occur as a result of an offence under the Act. Benefits Penalty notices assist NSW Fair Trading in obtaining industry compliance with the requirements of the Act and Regulation. It reduces the likely extent of legal costs and time that would otherwise be incurred if all offences were required to be formally prosecuted. Penalty notice offences also reduce demand on the justice system and allow minor offences to be dealt with swiftly. While the system imposes some administrative costs on NSW Fair Trading, it also reduces compliance costs, allowing investigators to concentrate on other more serious or urgent matters. Having no prescribed penalty notice offences would mean that all offences would need to be prosecuted in the courts, removing the administrative benefits and cost savings associated with penalty notices. This may result in little or no action being taken on minor breaches, leading to a consumer detriment. The Plumbing and Drainage Act also provides a new appeal process through the Land and Environment Court, providing additional protection to plumbers. Alternative options An alternative option would be to not prescribe any offences under the Act that could be dealt with by penalty notice or to add to the number of offences prescribed as penalty notice offences. However, generally speaking, penalty notices are only used for offences of a minor or technical nature, or where the breach is considered to be self-evident or detection of the offence does not require detailed investigation. Reducing the list of 16

19 offences would, in turn, reduce the benefits gained from taking matters away from the courts Staged commencement of Act and regulations (clause 15) Objective To allow for a staged commencement of the Act and regulations. Provision Clause 15 provides for a staged commencement of the Act. The new legislative framework will be introduced in two phases. From 1 July 2012, all requirements of the Act will commence in full in the Sydney Water Corporation and Hunter Water Corporation operational areas. Part 2, Division 1 of the Act will also commence across NSW, requiring plumbing and drainage work: to be carried out only by authorised persons; to comply with the Plumbing Code of Australia; and to use only authorised (watermark) fittings. From 1 January 2013, the other requirements of the Act will commence in the remainder of NSW and the plumbing regulator will delegate regulatory powers back to local governments, where appropriate. Clause 15 is made under Schedule 1, Part 2 of the Act which provides that the regulations may prescribe a date as the start date for a provision of the Act, or of the regulations, in a relevant utility area. Costs There are no specific costs associated with a staged commencement. While a potential cost may be a slight delay in achieving greater consistency, this has been mitigated by commencing the application of the Plumbing Code of Australia as the relevant technical standard across the whole state during the first phase of implementation. Benefits Allowing for a staged implementation of the Act and regulation will ensure that NSW Fair Trading and local council resources are appropriately utilised. NSW Fair Trading is well positioned to take on direct responsibility for regulating plumbing and drainage work in the Sydney Water Corporation and Hunter Water Corporation areas of operation from 1 July In other areas, local councils will require additional education and support from NSW Fair Trading if regulatory powers are to be delegated to them. NSW Fair Trading will undertake extensive consultation with local councils in the six months prior to commencement which will ensure that they have the capacity to undertake the delegated regulatory role under the new Act. Alternative options An alternative option would be for the Act to commence simultaneously across all areas of the state. This would require either a delay in commencement in the Sydney Water Corporation and Hunter Water Corporation areas, or for commencement in other local government areas to occur at an earlier date. Given the different requirements of these areas, either option would have a negative impact on one group or the other. Delaying operation of the Act would result in a continuation of different practices across the Sydney and Hunter areas, while commencing at an earlier date would result in local councils being unprepared for the transition to the new regulatory regime. 7.2 Overall impact of Option 3: the proposed regulation The proposed Plumbing and Drainage Regulation 2012 will provide the administrative detail required to support the operation of the Plumbing and Drainage Act

20 Impact on consumers The proposed exemption for minor works will provide savings to consumers by ensuring that these types of low-risk work are not covered by the compliance and inspection regime, including the payment of associated fees. The fees set out in the regulation are likely to be passed on to consumers by industry, however as they are consistent with fees currently charged by the network utility operators for similar activities, they will not impose any additional burdens on consumers. Impact on plumbing industry The proposed regulation imposes a medium level of administrative costs on the plumbing industry, which is consistent with the current regulatory requirements and costs. These costs arise largely from the requirements to notify the plumbing regulator of work and provide certain documentation in the case of an alternative solution. The regulation does however also provide an exemption from these requirements for certain low-risk activities resulting in a low level of impact overall. In total, it is considered that the changes from the current to new regulatory framework will have a minimal cost on industry. However, the new framework provides for greater consistency and flexibility for the plumbing industry. Impact on Government The proposed regulation imposes a medium level of costs on the plumbing regulator, NSW Fair Trading, while at the same time ensuring that an appropriate compliance and inspection regime is maintained to ensure the health and safety of the NSW community. The fee structure is designed to ensure that the regulatory regime is cost-neutral to government and the use of penalty notices will ensure that costs associated with prosecutions are kept to a minimum. Conclusion Option 3 - the proposed regulation: meets the regulatory objectives; provides high financial and health and safety benefits to consumers; and imposes low level administrative costs on the plumbing industry and government. 8. IMPACT ANALYSIS OF THE ALTERNATIVES TO THE REGULATION 8.1 Option 1: Do nothing The Do Nothing option would result in the Plumbing and Drainage Act 2011 commencing without an accompanying regulation. While the Plumbing and Drainage Act would still exist, a number of provisions would be unworkable and the objectives of the Act could not be achieved. It would not be possible to give effect to the intention of the Act without some further action by the Government, such as amending the Act. Including the proposed requirements of the regulation in the Act would reduce the capacity to amend the requirements quickly to respond to problems which may arise for consumers or to address changes in industry practices. Impact on consumers Without a regulation in place, the consumer protection provisions of the Act relating to the provision of documentation relating to plumbing and drainage work to the regulator and owners would not be accompanied by specified timeframes and requirements for additional information regarding alternative solutions would not be included. Consumers would also face increased costs for minor works if they were not exempt from the inspection regime. 18

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