In June 2011, Housing Ministers across Australia agreed to a blueprint for a National Regulatory System for community housing providers. The proposed system seeks to introduce nationally consistent regulatory arrangements to promote the growth of the community housing sector nationally.

Public consultation on the design elements of the new system, including the draft national legislation and the regulation impact statement, will take place in late 2011. A final proposal will be presented to Housing Ministers in early 2012.

It is proposed that the new National Regulatory System will be in place by 2013.

What is the purpose of regulation?

The purpose of regulating community housing providers is to:

• Improve tenant outcomes and protect vulnerable tenants
• Protect government funding and equity in the sector
• Enhance investor and partner confidence.

Why do we need a national system?

A national approach to regulation seeks to overcome the barriers, gaps and inconsistencies that have arisen through each State and Territory regulating community housing providers in a different way.

The objectives of the proposed National Regulatory System are to:

• Provide a consistent regulatory environment to support the growth and development of the sector
• Pave the way for future housing product development
• Reduce the regulatory burden on housing providers working across jurisdictions
• Provide a level playing field for providers seeking to enter new jurisdictions.

The intent is that national regulation will create a system that:

• Avoids unnecessary restrictions on new entrants
• Reinforces a clear separation between regulatory activities and policy and funding activities
• Provides staged, proportionate intervention provisions for the regulator that help to protect tenant, government and finance partner interests
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• Is principle-based, outcome-focused and proportionate to the scale and scope of regulated activities, thereby minimising unnecessary restrictions, impositions and regulatory duplication for housing providers.

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Core elements of the national regulatory system

National Law

The National Regulatory System will be introduced through consistent State and Territory based legislation. The legislation, referred to as the National Law, will be enacted firstly in the host jurisdiction, New South Wales, and either applied or adopted thereafter by other jurisdictions.

National Registration

Registered providers will be placed on a single National Register.

Queensland may retain separate state-based registration of funded local government providers.

Housing providers will be registered in one of three tiers:

• Tier 1: housing providers with asset procurement and development functions (and the ability to grow social and affordable housing supply through construction, purchase or acquisition) and/or complex tenancy and property management functions that operate at scale
• Tier 2: housing providers typically involved in moderately complex asset and tenancy management activities
• Tier 3: housing providers typically involved in small-scale tenancy management activities.

Detailed guidance notes on the registration tiers will be published. They will contain expectations of providers' systems, policies and practices to appropriately mitigate risk.

Registration eligibility

Housing providers will not be compelled to register under the national system. However, funding agencies may make registration a precondition for future funding or investment and require organisations with existing State and Territory funding or transferred assets to register.

Registration will be open to any housing provider that meets the requirements specified in the National Law including:

• An appropriate corporate structure for the proposed tier of registration. (e.g. Tier 1 housing providers must be incorporated as either a company limited by shares or by guarantee under the Corporations Act 2001; or a corporation incorporated under the Corporations (Aboriginal and Torres Strait Islander) Act 2006)
• Have in place mandatory arrangements that ensure in the event of wind-up and/or deregistration, surplus assets remaining after the payment of liabilities continue to be available for social housing
• Have a demonstrated capacity to meet and achieve ongoing compliance with the National Regulatory Code.

National Regulatory Code

The National Regulatory Code will set out the performance requirements that registered housing providers must meet under the national system.

The Code will not prescribe how providers should run their businesses, but rather will focus on the achievement of outcomes in the following areas:

• Tenant and housing services
• Housing assets
• Community engagement
• Governance
• Probity
• Management
• Financial viability.

The Code will also establish separate evidence guidelines to help providers meet the requirements for registration at each tier.

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Registrars

Each State and Territory will have a Registrar or appoint a Registrar from another jurisdiction to apply the National Law and regulate providers within their State or Territory.

Registrars will have the power to register providers, monitor provider performance, to intervene when non-compliance occurs, and to cancel the registration of non-compliant providers. Where a provider operates across multiple jurisdictions, a Lead Registrar will be appointed so the housing provider only deals with one Registrar.

Registrar powers

The National Law will set out the specific obligations on registered housing providers including on:

• Complying with the National Regulatory Code
• Providing information, records or documents requested by the Registrar
• Allowing the Registrar to carry out inspections
• Notifying the Registrar of anything that could affect their registration status
• Maintaining a register of social and affordable housing assets.

The National Law will also give the Registrar powers to intervene where a provider is not meeting their obligations. These powers are intended to provide staged, proportionate intervention provisions that reflect the seriousness and potential consequences of a provider's failure to meet their obligations.

The focus is on the Registrar engaging early when warning signs are identified in order to avoid the possibility of serious non-compliance, on working to return the housing provider to full compliance where noncompliance occurs or, as a last resort, deregistering the provider.

The intervention options available to the Registrar include:

• Issuing a notice of non-compliance
• Issuing mandatory instructions, including directing the provider to strengthen governance arrangements and/or the skills and expertise of the governing body
• Issuing a notice of intent to cancel registration
• Appointing a statutory manager to take control of a registered housing provider and carry on its business while bringing the provider to compliance (or facilitating deregistration), before returning control to the provider's governing body.

All intervention powers will be subject to legislated procedural fairness and appeal provisions. Intervention protocols will be published to guide Registrar actions.

What's not in the national system

The proposed National Regulatory System does not require the referral of any powers from States and Territories to the Commonwealth, nor is Commonwealth legislation required to enable the System.

States and Territories will continue to be responsible for:

• Appointing and supervising a jurisdictional Registrar (or nominating another jurisdiction to undertake regulatory activity on their behalf), and
• Maintaining authority over funding arrangements. These sit outside the National Regulatory System and include asset controls in legislation, funding agreements and contracts, and tripartite agreements with providers and lenders.

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Governance arrangements

Housing Ministers will have an overall supervisory and policy-making role in relation to the National Regulatory System using the decisionmaking processes of the COAG Standing Council or another appropriate mechanism.

The Housing Ministers' Advisory Committee (HMAC) or its successor will continue to advise Housing Ministers on policy requirements for regulation to meet government priorities and objectives. HMAC will be responsible for resolving cross-jurisdictional disputes that cannot been resolved using the national system protocols or operational guidelines (e.g. disputes about the appointment of Lead Registrars).

A National Regulatory Council will be established as an independent advisory committee, appointed by Housing Ministers to oversee the operation of the National Regulatory System with Secretariat support. A National Registrars' Forum will coordinate implementation of the new system.

Implementation

A detailed implementation plan will be prepared once the public consultation has been conducted and final agreement is reached by Housing Ministers on the national legislation.

Key implementation tasks will include:

• Developing a common application form for national registration
• Developing evidence guidelines and intervention protocols
• Negotiating transitional arrangements for providers registered under current State or Territory regulatory systems
• Coordinating implementation with other reforms (in particular the Australian Charities and Not-for-profit Commission).

In the meantime, an HMAC Working Group is coordinating development of the key design elements of the National Regulatory System in consultation with stakeholders. This work includes:

• Incorporation requirements and registration tier guidelines
• Evidence guidelines
• Regulatory engagement and intervention guidelines
• Guidelines for aligning the National Regulatory System with other regulatory systems (including the regulatory functions of the Australian Charities and Not-for-profit Commission).

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