'Quite good theatre'? The productivity commission and architectural regulation.

• Jurisdiction: Australia
• Date: 01 January 2005
• Author: Keddie, Jeffrey
• Published date: 01 January 2005
• Author: Keddie, Jeffrey

Abstract

The Inquiry into architectural regulation was the first national, public review of the regulation of a profession under National Competition Policy. Architects urged maintenance of regulation; the Productivity Commission, equally predictable, found there was insufficient public benefit to justify it. The Inquiry showed the utility of the Policy for analysing professional regulation but also its limits. The architects 'strategy of side-stepping State review in favour of a national review managed to delay reform. There remained significant, unresolved problems for professions regulated by the state.

Introduction

When we look for reforms to professions through application of the National Competition Policy (NCP), the story is not sanguine: where is the deregulation foreshadowed in the early days? The record of legislation review shows how significant the obstacles, how strong and embedded professions and their regulation are in society. At an early hearing, one Commissioner, Judith Sloan, reminded a witness, 'this is the result of Hilmer.... Watch this space', but when the inquiry was first mooted, the Victorian registration board Chairman said, 'Hilmer-schmilmer, we've heard it all before'. (1)

In the 2000 Commission Inquiry into architectural regulation, architects argued that contribution to civic amenity distinguished them from non-architect competitors. Regulation signalled education, service quality, ethical commitment and independent scrutiny of behaviour. It symbolized state recognition of providers for whom there were no equivalent substitutes. It redressed information asymmetry and search costs. Improvement would come through recognizing architecture as a profession under a national regime.

For the Commission, civic amenity was not relevant, benefit from legislation not a given. Architects must establish that regulation's benefits exceeded costs of imposition, otherwise repeal should follow; comparable professions managed without regulation; consumer protection laws met information and complaint needs; deregulation would stimulate architects to compete, to everyone's benefit.

The Inquiry revealed both value and limitations in NCP legislation review. It was an opportunity to probe a profession's assumptions. Could it evaluate legislative consistency, objectives and efficacy, and generate insight into issues of power? Yet the Commission interpreted the Terms of Reference narrowly, confining itself to economic issues. The Commission told its reform story, but could not convince architects; architects told stories of symbolism and identity the Commission disregarded. The Commission fell back on its principles; architects returned to 'in-house' development of a national para-legislative regime. It was a stalemate.

This paper explores how a promising beginning, a cogent analytical framework and an institutional reviewer were insufficient to ensure reform of a profession's regulation.

Background to the Inquiry

In 1992 the Trade Practices Commission (TPC) recommended substantial restructuring of State Architects Acts and a year later the Hilmer Report questioned such legislation. (2) Registration boards began setting their house in order: mutual recognition was introduced, including recognition of New Zealand registration. A peak body, the Architects Accreditation Council of Australia (AACA), produced legislative guidelines. Victoria made its regulations TPC-compliant.

A Northern Territory review recommended repeal of the Act there, (3) alarming other boards, who wanted a review forum that favoured retention of Acts. Regulator consensus was that reviews in New South Wales, Queensland, South Australia and Western Australia presented no difficulty, but in 1998 the Victorian Government announced a joint review of architects and building legislation. The Royal Australian Institute of Architects (RAIA) and AACA therefore sought to allay any threat through a national review, despite absence of Commonwealth power and uncertainty about the reviewer's identity; indeed, the Chairman of the National Competition Council 'could not believe his ears' when he was asked to support the request. (4) The Assistant Treasurer issued a Reference--to the Productivity Commission. (5) Victoria, nonetheless, pressed on with its own.

The Inquiry

The Inquiry was conducted 'on behalf' of Governments. The principal aims were consistency and meeting NCP obligations, determining options on a community cost-benefit basis, and avoiding duplication. The scope included social, legislative and economic aspects, other reviews, COAG guidelines, and linked legislation. The Report would identify differences and the public interest rationale, clarify objectives and their appropriateness, identify potential restrictions on competition and likely effects, consider the social, economic and cultural impacts of architectural services, and identify stakeholder views. Reporting and response would be swift. (6)

The Commissioners had inquiry experience. Practised academically, they were familiar with the relationship of tertiary education to professions. Dr Neil Byron had longstanding interests in environmental economics; Professor Judith Sloan participated in the politically sensitive Inquiry into NCP effects on the 'bush'. (7)

The Reference allowed the Commissioners to focus on cost-benefit tests and lack of alternatives, on 'potential' restrictions and 'likely' effects, not just demonstrable cases, while architects could look to the 'quality of the built environment', 'community service obligations' and 'the long term social, cultural and economic impacts of architectural services'. (8) Architects' questions about social and cultural contribution generated assumptions about structural supports, but Commission methodology linked information asymmetry or health and safety to specific legislative provisions, confining debate and chains of causality and excluding the nature of modern architectural practice. NCP requirements ranked highest: the Commission chose strict NCP principles, arguing that the whole community benefited from competitive markets. The NCP test required scrutiny of explicit legislative objectives to reveal the rationale for intervention, but the dates of most Acts and drafting conventions meant that written objectives were largely procedural, making the laws vulnerable to the test. More importantly, the test reversed the onus: laws must first be justified, before amendment was considered.

Architects wanted to establish primacy in their Acts: when an architect and RAIA officer was elected to the Victorian regulator in 1993, his first question was, 'What is the Board going to do for architects?' (9) Architects were subject to the Acts, paid for regulators, provided governance and expert assessment, delivered services and assured quality. Regulators ensured proper behaviour and accountability to parliaments. Architects argued for market segmentation; they promoted state intervention and resisted rationalization, challenging regulatory reform; they pursued public, national, statutory recognition. It was a multifaceted agenda but, as Professor Sloan observed, 'there [was] clearly no economics taught in the architectural course'. (10)

The Issues Paper confined itself to legislation regulating architects (not related occupations, though it included professional associations), to address objectives, competition effects, complaints against architects, consumer protection, market failure and spillovers (built environment quality and long-term social and cultural impacts), benefits, alternative regimes, consistency and international impacts. Five of the seven reference citations showed reformer-NCP interests. (11)

The Draft Report recorded 49 visits to organizations, firms and individuals, including the ACCC, the NCC, every regulator and significant professional association, relevant government departments, four universities and several prominent firms. The Commission had private information on stakeholder positions but it discouraged confidential submissions. (12) The majority of written submissions (one thousand, two hundred and one pages plus attachments) were pro forma support for regulation. Universities made eleven submissions, on export of educational services. Government contributed only six. There were thirty-eight representing professions, associations or authorities. Major firms were not well represented, though the Commission visited some. Regulation seemed more important for small practitioners, for whom title was a significant brand. (13) DFAT supported regulation on export grounds, but also pointed to Australia's international trade commitments.

Participants often understood neither Constitutional constraints nor regulation. APESMA advocated a 'National Architects Registration Board' with community and employee representation or mutual recognition--the latter already existed. The NSW Australian Institute of Building called for national registration 'administered by a statutory body' such as AACA--which was a creature of the regulators. Architects often suggested national legislation was a matter of effort and will. (14)

Regulator relationships limited diversity of views. AACA submissions were composites of State positions with a national overlay. (15) The New Zealand regulator, an AACA observer, shared Australian opinions. (16) The RAIA had representation on every Board. (17) The Commission hinted at governance problems in AACA's multiple 'hats', but its understanding of divisions in the profession was confined to mechanisms rather than principles and overlapping capacities. (18)

The Draft Report surveyed the laws, effects, alternatives and export services and reforms, detecting a failure 'to target consumer and community issues directly and comprehensively'. Self-regulation would develop in the absence of legislation. Competition was 'likely to serve' the community and the profession. The Commission called for...