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Thursday, 3 February 1994
Page: 361

Mr LES SCOTT (4.44 p.m.) —The amendments in the Training Guarantee (Administration) Amendment Bill 1993 are very important. They show the government's ongoing commitment to having a highly trained work force and the flexibility this government is prepared to adopt in making a lot of our proposals user-friendly to business, which I think the Minister for Schools, Vocational Education and Training (Mr Free) highlighted in his second reading speech.

  The training of our work force has always been a very important aspect that most of the work force has considered itself. Unfortunately, employers have not always considered it necessary to train their work force. It is for that reason that the government took action, by bringing in the training guarantee levy in the first place—to ensure that our business sector was encouraged to train its work force to meet the growing needs in society today. That is very important, and I am surprised that those opposite are not actually supporting this measure; rather, they are trying to tear it down.

  There are many examples of how industry has embraced the training guarantee levy. A lot of employers have embraced it in a very positive way—it seems a positive way to improve their business—and, of course, there are others who have decided that it is too hard. That is the big problem.

  Interestingly enough there was a very positive response by an employer in my local newspaper, the Queensland Times, on 3 February 1994. There was an article with the headline, `New staff to beat downturn', written by a journalist called Tony Moore. It says:

  Business risked being unable to trade out of the recession because they have not been training staff, a major Ipswich manufacturer said yesterday.

  Maxcon managing director Greg Johnston said repeated job vacancies showed many firms were finding it difficult to find skilled labour.

  Maxcon is one of the region's largest steel fabrication plants, employing about 100 people.

  Mr Johnston said he believed during hard times many firms cut back on apprentices, traineeships and general training.

  "You would expect that as we come out of recession, there would be a large pool of unemployed out there with skills."

  "(But) the industry has contracted and these people have not been training—and people have left the industry—and there is no pool of skilled labour."

  He warned business faced an unnecessary lag in economic growth from the recession because of the lack of training.

  Ipswich CES manager Richard Spurrell said there had been a shortage in skilled labour in the 1980s.

  He said a shortage of training had been the problem in the past, but said the present labour shortage was more complex.

  Maxcon yesterday took on six new apprentices, five engineering tradespersons (fabrication) and one engineering tradesperson (mechanical).

I congratulate Mr Johnston and his firm for the initiative they have taken not only in putting on those new people but also in drawing to industry's attention the problems that industry does face if it does not train its staff. It is rather timely that this happened to be in this morning's paper when we are talking about this legislation here today. I am very pleased that that particular article has been drawn to my attention. I once again congratulate Mr Johnston and the local paper for running such a positive article on employment opportunities and the need for training.

  There is growing evidence in Australia that the economic recovery is now under way, and that has been acknowledged by others here. Earlier this week the Treasurer (Mr Willis) announced revised budget forecasts that indicate the economy is firmly back onto the path of growth, and that is very important for us. GDP is now forecast to grow at 3.5 per cent this financial year, with inflation forecast to be only two per cent in 1993-94. These are more positive signs. Australia is in an excellent position to exploit the enormous trade opportunities now opening up within our region and throughout the world as a result of the liberalisation of world trade through the conclusion of the Uruguay Round of GATT and the efforts of the APEC forum.

  The minister at the table, the Minister for Development Cooperation and Pacific Island Affairs (Mr Bilney), with his responsibility for the South Pacific region, the work that he has to do there and with his responsibility for our local regions, would agree that this is going to be a big plus there. As I have said in this place before, I recently visited some of the South Pacific islands with the honourable member for La Trobe (Mr Charles) to actually see the opportunities that we have there. I am very pleased that the minister is here to encourage the honourable member in any way he can because I know that he is doing a good job in that area anyway.

  To ensure that Australian industry is in a position to take advantage of these opportunities, both globally and in the Asia-Pacific region, it is essential for industry to commit itself to devoting significant resources to increasing the skills of its work force. Since its introduction on 1 July 1991, the training guarantee scheme has played an important role in encouraging Australian business to devote increased resources to staff development to increase Australia's international competitiveness.

  Sadly, prior to the introduction of the training guarantee, an unacceptably high number of employers showed little interest in investing in their greatest resource, their employees. The government wisely chose to go down the path taken by many other advanced industrial countries and introduced a mechanism to address this situation. Some of the other economies in which governments have attempted to improve the national training effort over recent years include Switzerland, Germany, France, the United Kingdom, Sweden, Korea, Hong Kong and Singapore.

  In Switzerland, in-firm training is strictly controlled by the government, with the cost of vocational training shared equally between the government through its training system and employers through their in-firm training. The French have taken a structured approach to training for two decades, with firms that employ more than 10 people being required to spend an amount equal to 1.4 per cent of total labour costs.

  Examples of countries in the Asia-Pacific region which have taken a government-led approach to training include Singapore, Hong Kong and Korea. For example, in Hong Kong, the Vocational Training Council oversees a series of training centres financed from government revenue in addition to industry training authorities which are financed by levies established by legislation. These facts refute one of the great myths which has developed around the training guarantee—that the Commonwealth government has adopted a go-it-alone approach to training which has reduced the competitiveness of Australian export industries. The countries which I have mentioned and the Australian government recognise that encouraging industry to invest in training and staff development, rather than imposing costs on industry, greatly benefits industry by providing it with a more highly skilled and productive work force.

  It is probably important to draw to the attention of the House and of the honourable member for La Trobe, in particular, that in the United States of America, with which the honourable member has had a long association, during the election campaign in late 1992 President Clinton announced plans to establish a training scheme which was to be modelled on the Australian training guarantee scheme. I understand that that is yet to happen, but it was certainly an issue in the US election. It shows that the US, too, recognises the need to move in this direction. Given the current levels of international competitiveness, Australia must have a highly skilled work force if it is to compete effectively.

  This legislation will improve the efficiency of the training guarantee and will make the scheme more adaptable and flexible. It shows the government's ongoing commitment to assisting industry wherever possible. The legislation will increase the ability of employers to map out their training budget over a longer period, as well as reducing the cost of complying with the legislation, thus increasing the overall flexibility of the system.

  The perception amongst employers that the training guarantee was inflexible and the argument that it increased the cost of complying with government legislation was an issue investigated by the Ipswich regional employment advisory group which I convened last year. I established this group to prepare a submission from the Ipswich region to the government's employment task force and the committee on employment opportunities, which was set up by the Prime Minister (Mr Keating) and which was responsible for preparing the employment green paper released in December last year.

  Members of the group undertook discussions with representatives of the Ipswich Regional Development Corporation, employers, local skillshares, private training providers, IMCAS, a group apprentice scheme in the Ipswich region, and community representatives. In its discussions the group came to the conclusion that, while there was perhaps room to streamline the operation of the levy, companies which already provided adequate training for their staff had nothing to fear from the training guarantee.

  One example of a company which members of the employment advisory group met and which had not been affected by the training levy was a major Queensland paving manufacturing company called Claypave. Claypave started with a labour force of 20 in the mid-1980s which quickly grew to 74 by the end of the first year. It currently employs over 150 people. Claypave has done it and done it well during a very difficult time for Australia. The company produces a range of products, from domestic to industrial pavers, and exports to the South Pacific, Taiwan, Japan, China and Singapore. Within Australia 40 per cent of its product is sold in New South Wales. At present, Claypave receives five per cent of its revenue from exports, and this proportion is rising.

  Most of its work force start young and take part in in-house training programs which encourage multiskilling so that there is a trained backup for every position. This company also gives bonuses for acquiring work related qualifications, such as first aid certificates or forklift licences. Claypave has no quarrel with the training levy as it was already providing adequate training for its staff before the introduction of the levy. I congratulate the managing director at Claypave, John Peile, and his staff for the efforts they are making in that area.

  While other brickworks have headed towards automation, Claypave has stuck to labour-intensive production processes as it has found that it can add more value this way and then charge a higher price to the market for a quality product. It really is a high quality product which is a great credit to the work force and the management. Labour-intensive processes allow Claypave to produce a variety of pavers at the one time. Claypave management have a deliberate policy of trying to maximise margins rather than reducing costs and trying to maximise profit rather than being concerned with the level of cost needed to achieve the profit. This philosophy means that, rather than shedding labour in order to minimise labour costs in the way that many businesses have done over recent years, Claypave is prepared to look at hiring extra labour if the labour will enable it to increase its margins. While Claypave has not utilised federal government labour market programs—it has not needed to because it has done most of it in-house—the company has taken advantage of other federal government initiatives to move into the export field.

  It is presently expanding its production capacity through the construction of a new kiln, at a projected cost of $6 million. The 10 per cent investment allowance announced by the Prime Minister in the Investing in the nation statement, which will be worth around $600,000 on this project, was a major factor in the company going ahead with its expansion plans and has helped it in making that decision, which has been beneficial to the expansion of the company and the work force.

  Other factors, such as the accelerated depreciation allowance provided by the federal government, have also been of great benefit to Claypave. Austrade has been of great assistance to this company as well in getting background on potential markets, thus smoothing the path for expansion into these markets. Claypave is an example of a significant number of employers who, rather than whingeing about the training levy and other government policies, have taken advantage of the policy framework put in place by the government in order to dramatically expand the scale of its output and move into the export market.

  Rather than placing a burden on business, the requirements of the training guarantee provide enormous opportunities for business by encouraging it to increase the productivity of its work force. The training guarantee is not a method of raising revenue for the government; it is a pro-business way of ensuring a more highly skilled work force. I would suggest that the government's best position would be if no payments were collected from the training levy. We would then know that employers are providing adequate training for their staff.

  The honourable member for La Trobe mentioned that some employers had reduced training. I find it difficult to accept that any responsible employer or business would reduce its training to 1.5 per cent in order to just meet that minimum requirement. I do not think any responsible business would take such a silly action.

  The ideal situation would be where no company was forced to pay a levy, as this would mean that all employers were looking after their own self-interest by increasing the skills of their work force. I have no difficulties with that if they are doing that. The training guarantee and other reforms, including the establishment of the National Training Authority, which the Prime Minister referred to here today, will help to ensure that as our economy continues to expand into the 1990s we do not suffer the same skill shortages which were suffered in 1970s and the early 1980s. I referred to this before when I quoted the newspaper article concerning the local Ipswich CES manager. We do not want those skill shortages to occur again. We should avoid that at all costs.

  However, to ensure that these shortages do not occur, it is important that business make a very firm commitment to training. The article that I referred to earlier shows the commitment of some people to training and the need to ensure that people are well trained in our work force. If we draw attention to the need for Australia to become more competitive, to meet the challenges that are now available, not only in this region but also on a global basis, given all those positive things over recent times that came out of the GATT round—particularly, as I said earlier, trade with the South Pacific region, for which the minister at the table has responsibility—the opportunities are enormous, but we have to make sure that our work force is trained. We have to make sure that we encourage employers to train our work force.

  Before I entered parliament I was involved in the banking industry, and I was involved with my union in the banking industry. We were very supportive of the proposed training levy at that time. Even though my organisation, a major bank in Australia, was doing a lot of in-house training, it had to recognise where those costs were incurred. But the bank knew where the costs were because it was always prepared to put the cost of training staff on the balance sheet, which was important. I do not believe that the training levy has been detrimental to large business because most large businesses would have been training their staff anyway. Particularly in the banking industry in which I was involved, large institutions spent a lot of money on training and rightly so. This bill formalises training. It encourages employers to ensure that they are actually training those people.

  It is important that industry rises to the occasion and provides greater training opportunities for employees. The government is willing to listen to the genuine concerns which have been expressed by some sections of industry about the operation of the training guarantee. That is what these amendments are about: they show that the government is prepared to be flexible to address those issues.

  Under the amendments in the bill, the operation of the guarantee will be made more flexible in an attempt to avoid wasteful and ineffective spending by companies towards the end of the financial year simply to spend the necessary minimum. To those employers who do the things that the honourable member for La Trobe was talking about—sending people away for long weekends in big hotels—I do not think that is a productive way to operate. If some employers are doing that, I think they are being rather foolish because they are really not going to get value for money in training people, making them multiskilled and producing more for the company.

  Employers will be able to carry forward spending in excess of the required minimum from one year into the next—I think that is a very good initiative—while also being able to make up for insufficient spending in one year by spending more in the next. Other amendments to the guarantee are also contained in this legislation, including the removal of the need for employers to subtract subsidies by government bodies for apprentices and trainees when working out their net eligible training expenditure, changes to the clauses relating to work experience for students and teachers and a provision to widen the range of bodies which can group for the purposes of the act, thus giving organisations greater flexibility to maximise their training opportunities.

  I do not believe that employers are picking up the opportunities that traineeships provide by having new people working in their businesses and by preparing a much more skilled work force in the longer term. There are many young people today who would gladly, I believe, take on a traineeship if they had the opportunity. This encourages employers to take on trainees and apprentices.

  Overall, the legislation covers a range of measures aimed at simplifying the operation of the guarantee for business, particularly small business. This legislation meets a commitment given by the government before the last federal election to make the training guarantee more business friendly. I commend the amendments to the House.