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House: Senate

Presented by: Senator Margaret Reid

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Purpose

To remove certain numerical conditions attaching to industry, professional and trade associations seeking to qualify for registration as industry training agents.

Background

The training guarantee levy came into force on 1 July 1990, and requires employers to contribute a percentage of wage costs, currently 1% and 1.5% from 1 July 1992, to formal training. The requirement was introduced in an attempt to improve the training effort of most Australian employers and to increase the skill levels of the workforce. A survey conducted by the Australian Bureau of Statistics (ABS) in the July-September 1989 period, which dealt with the provision of formal training, found that 22% of employers provided training and that these employers employed approximately 75% of the workforce. The levy was opposed by a number of employer groups and the Opposition, and these groups retain their disagreement with the idea of forcing employers to conduct a certain level of formal training. One aspect of the levy that was criticised was that it is payable regardless of the profitability of the enterprise, so that it must be complied with even if the employer is not making a profit. This has become more relevant since the recent economic decline.

The effect of the levy is uncertain at the moment as there are no figures available from the ABS to follow on from their previous survey. The next figures are expected to be available in May. However, there have been various reports of surveys conducted by other groups. In the second reading speech to the Training Guarantee (Administration) Amendment Bill 1991 it is stated that a survey by the Australian Chamber of Commerce and the State Bank in NSW, indicates that 45% of employers had increased their training spending in the September 1990 quarter. On 10 April 1991, the Sydney Morning Herald carried a report on a survey of 400 members of the NSW Chamber of Commerce which found that less than half had contributed the required 1% of payroll to training.

While the effect of the levy may not yet be clear, it has been clear that the initial operation of the scheme has not been without difficulties. One of the major problems was the failure to have guidelines for registered industry training agents (RITAs) in place until December 1990. The role of RITAs is to approve training expenditure as eligible under the scheme, and in their absence the prospect arose that funds spent on training may be ruled ineligible at the end of the year by the Tax Office, which has responsibility for potential tax liability under the scheme. The passage of the guidelines followed much disagreement between the Government, Opposition and the Australian Democrats, and were finally passed, with Opposition support, after certain changes from the Government. One of these involved the fees that may be charged by RITAs. It was argued that the current flat fee structure was inappropriate, as was the inability to charge fees where a training scheme was rejected as ineligible under the scheme.

Another difficulty arose for those firms that had a good training record and were already exceeding the schemes requirements. Such employers were penalised by the scheme as they had to bear the administrative costs associated with compliance with the scheme. In the March 1991 statement `Building a Competitive Australia', the Prime Minister announced that to promote excellence in training, enterprises that spend more than 5% of their payroll on training would be exempted from the administrative requirements of the training guarantee scheme. There was no indication of how many employers would be effected by this change. Other difficulties have arisen in the application of the levy to bodies that are not separate legal entities, i.e. unincorporated associations and partnerships, where the liability for the levy is personal rather than the function of the employing company.

Part 10 of the Training Guarantee (Administration) Act 1990 deals with the registration of RITAs. RITAs are required to be registered and supervised by the National Training Board under guidelines made by the Minister. The National Training Board and RITAs have to comply with the guidelines. The role of RITAs is to approve training expenditure as eligible under the scheme to employers who are in doubt about the eligibility of their training. In addition, RITAs help employers organise their training effort by giving advice on how they can best do this and by providing other training services.

Clause 5 of the Industry Training Agents' Guidelines No. 1 (the Guidelines) provides that a person may only be registered as a RITA if they are included in one of the categories specified in clause 6 and meet the criteria specified in clause 7.

The categories specified in clause 6 include: an industry training advisory body; an industry association that has significant representation; a profession or trade association; and a general representative. To fall within a category an applicant has to meet certain qualifying conditions. For example, if an industry association proposes to act as a RITA in every State and Territory, it has to be a body that represents at least 1 000 employers in the relevant industry, or employers who represent at least 50 000 employees in the relevant industry. Similarly, where an industry association proposes not to act as a RITA in every State and Territory, it has to be a body that represents at least 200 employers, or employers who employ at least 10 000 employees, in each State or Territory in which it proposes to act as a RITA. Similar qualifying conditions apply in relation to professional or trade associations.

Certain small employer groups argue that difficulties have arisen in relation to the numerical conditions attaching to qualification within certain categories of clause 6 of the Guidelines. In the Second Reading Speech to this Bill it is stated that the numerical conditions have rendered many recognised professional and industry organisations ineligible to become RITAs. The example given is of organisations such as Real Estate Institutes, Law Societies, professional associations of doctors and dentists, that are recognised as representing their profession or industry but represent fewer than 200 employers, may find that they are ineligible to qualify as a RITA. This Bill proposes to address this problem.

Main Provisions

The effect of clauses 3 and 4 will be to replace the numerical conditions attaching to qualification within the clause 6 categories of an industry, professional or trade association. The new test will be whether an industry, profession or trade association is recognised by the relevant industry, profession or trade as representing its interests.

Bills Digest Service 2 May 1991

Parliamentary Research Service

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Commonwealth of Australia 1991

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Published by the Department of the Parliamentary Library, 1991.