AAAA News

How government licensing regimes can impact your business.

There is no doubt that in the right settings and for the right sectors, a licensing system provides consumers with increased confidence, and it increases the reputation and professional standing of the trade.

It certainly can feel unfair and even a little insulting that anyone can just “hang out a shingle” and offer services in our sector. Licensing becomes a legitimate barrier to entry, ensuring that businesses are fully qualified to deliver services.

But licensing comes with increased compliance costs, and we see that in some jurisdictions, the licensing requirements reproduce and multiply to an alarming level that can become detrimental and sometimes nonsensical.

We often hear that electricians need to be licensed, so why not automotive technicians. We need to be careful what we wish for here, because licensing regimes can come with additional compliance costs, preconditions including mandatory training, random audits and enforcement regimes.

More importantly, wherever we see a government unit responsible for implementing a licencing scheme, we often see the licence conditions multiplying, becoming more and more complex and increasing the compliance burden – and in many cases, we don’t see much enforcement.
Our view is that a good scheme rewards the professional players and penalises the bad ones. But we don’t see much of that – instead we see an ever-increasing regulatory burden on the good players and no action against the unlicensed.

While it can be debated where the line can be drawn, the NSW Government has recently proposed what could be a new gold standard in what not to do.

The recent proposal set out by the NSW Government proposes the introduction of new repairer classes including proscriptive EV classes and Heavy and Light Vehicle classes that will fragment our workforce into smaller and smaller segments.

What would this mean if these proposals were accepted? It would lead to a fragmentation of
our labour force. Effectively, a light vehicle technician will no longer be able to perform any work on a heavy vehicle and without substantial mandatory training, this tech cannot work on a hybrid either.
As you would expect, in AAAA’s submission we oppose these new mandatory repair classes because it fragments our labour force and prevents our ability to adapt to new technology as and when it arrives in the market.

Interestingly, it also opens the door for our industry to ask the important question: what benefit does a licensing regime provide in 2024?

Across Australia states and territories have different requirements for automotive licensing, some place the onus on the premises, others place it on the individual technician, and NSW does both, but there are no noticeable differences in consumer satisfaction, and their options for remedy.

We already have national laws that mandate businesses can not claim to offer services that they are not qualified to deliver, and we have consumer protection and consumer guarantee laws that require remedies and refunds if work is not performed to the required standard.

Notwithstanding the proposal from NSW, it is important to note that many do see licensing
as a tool to weed out unqualified technicians or bad actors and we might even agree if it was enforced.
A good licensing scheme needs to be just, and provide a value add to those who are buying into the scheme. Unfortunately, we don’t see this principle in action.

An interesting example from Victoria is the licensing of automotive engineers. It was a licence that was originally proposed for the building industry after a spate of incidents that highlighted market failure, however this was then extended to all engineers.

Two years into the scheme we are getting multiple reports that demonstrate that automotive engineer licence holders are seeing no value add. In fact, this lack of benefit and compliance burden on industry was so evident that the South Australian Government removed automotive engineers from their engineer licensing scheme in late 2023.

Our industry has consistently demonstrated our capability to adapt to technological changes without the need for government licensing. From the introduction of Electronic Fuel Injection to Electronic Stability Control, our workshops have evolved with each new technological challenge, investing in tools, equipment, and training to meet safety and consumer standards.

This move by the NSW government isn’t the first, and we are sure that it won’t be the last move from a government department that wants to appear to be responding to and supporting the transition to EVs. It is a popular topic within government, but we need a policy response that is well informed and technically based.

EVs are complex and present a safety risk. So do petrol and diesel vehicles. EVs need specialist skills – true, but how far do we travel down the path of excluding technicians from working on vehicle classes and specific technologies. Heavy vehicles, light vehicles, ADAS equipped, EV, Hybrid, Plugin Hybrid, Hydrogen, Synthetic fuels – how far do we want to go?

It is our job as the representative industry association to ask more from governments when licensing proposals are put forward, and to ensure licensing options clearly articulate the benefits and justify the regulatory and cost burden.

But importantly we also have an interesting challenge as an industry – do we collectively support licensing individual automotive trades as the best way to ensure consumer protection? And if a complex and costly licensing regime does not deliver consumer benefit, what alternatives do we offer as an industry to provide car owners with the confidence that the work will be performed by appropriately qualified technicians in a manner that respects the consumer’s statutory rights?

If we want to constructively influence our future licensing destiny, we may need to address that one important question.

If you would like to offer your thoughts on this subject, please email advocacy@aaaa.com.au

This article was originally published in the July Australian Automotive Aftermarket Magazine.