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Thursday, 3 February 1994
Page: 373

Mr VAILE (5.44 p.m.) —It was interesting to listen to the closing remarks of the honourable member for Port Adelaide (Mr Sawford) regarding the opposition's attitude to training. I do not think the opposition is opposing or being negative about the necessity for training in this country. To the contrary, we are trying to point out to the government that the training guarantee levy included in the Training Guarantee (Administration) Amendment Bill is going in completely the wrong direction. The levy is misdirected and is not providing training to the right areas.

  We have in Australia today a vacuum of skilled tradespeople. An industry in my electorate had to go to England to get a skilled tradesperson who could manufacture components for the automotive industry. That is what we are talking about. Even Bill Kelty, who is the boss of the ACTU and the chairman of the government's task force on regional development, said in his report that this training guarantee levy should be suspended because it is not doing the job that it was intended to do.

  The opposition supports training for safety in the workplace where it is quality training not quantity training. This amendment bill will not provide that. That is why I support the amendments to be moved in the committee stage by the shadow minister for schools, vocational education and training, the honourable member for Menzies (Mr Andrews), to abolish the compulsory training guarantee levy.

  The scheme, when introduced in July 1990 by the honourable member for Fremantle (Mr Dawkins), had a lot of good intentions. The government wanted to improve the training opportunity for Australian workers. Yet, as the shadow minister for schools, vocational education and training said yesterday, the path to hell is always lined with good intentions. The scheme was introduced to improve the quantity and quality of training by employers. This scheme may have improved the quantity of some companies' training programs, but in the vast majority of cases it has done nothing to improve the quality of training programs at all. Quality training, in my eyes, is the most important issue we will speak about today; it is not the necessity for training, it is the quality. I do not think anybody backs away from the need in Australia for quality training programs. I believe we should be focusing on and targeting traineeships, and not taking the shotgun approach of this training guarantee levy.

  The scheme currently requires employers with annual payrolls of at least $220,000 to spend at least 1.5 per cent of their payroll on eligible training. Employers who spend less than the minimum required become liable to pay a training guarantee charge equal to their shortfall. This amendment bill is an amendment to the Training Guarantee (Administration) Act 1990, and I see it doing nothing to effect the overall direction of the scheme. I reiterate to the House the recommendation that has come from the government's own committees—that this program should be suspended; it is not targeted properly and it is not achieving the results it was to achieve.

  The scheme has failed practically in a number of ways. It has substantially increased the cost of record keeping with respect to training expenditure and has done so, in many proven cases, to the detriment of expenditure on training individuals. The scheme has brought to the attention of some companies their actual level of expenditure in excess of the minimum which the companies then determine to reduce as a cost cutting exercise. Without a doubt—and probably the most damning indictment of the whole program—the scheme is a tax on jobs and has inhibited employment. This scheme has no solid basis to continue operating.

  The government can quote textbook figures on how much training has been spent on what areas, but the scheme is not targeting the people originally intended and must be abandoned as soon as possible. The challenge is now before the government not only from the opposition but also from, as I say, a number of reports. Even the government's green paper on employment talks about some of these issues, but it pulls up short of recommending a suspension of this program.

  Within the government's own ranks the training guarantee levy has received substantial criticism. The Prime Minister's task force on regional development, chaired by Bill Kelty of the ACTU, confirmed that the levy was not providing the training for which it was designed. The task force itself recommended that the levy be suspended.

  This is no opposition task force or opposition committee making this recommendation to the government; this is something that has been set up by the government. I put it to the House that the challenge is now before the government to take on some of these recommendations. This is significant criticism from within the Labor Party's own ranks. I will be interested to hear some of the government speakers try to criticise the argument put forward in the Kelty paper.

  Criticism also arose from the green paper on employment. Despite the green paper not being the most significant philosophical document, it did pick up on one important issue, and that was that the training guarantee levy was extremely inequitable as it forced employers to bear the entire costs of training. While the green paper stopped short of calling for the levy to be scrapped, this is still a further damaging criticism that must place the abolishment of the scheme on the agenda for this government.

  The scheme, which was introduced by the honourable member for Fremantle during 1990, has been around for over three years. The government introduced the scheme with all good intentions. However, the government must now be flexible and accountable enough to look at the scheme and realise that it has not worked. It is certainly time now for the government to go back to the drawing board and look for new ways of providing quality training in the Australian work force.

  I think it is important to look at what we are actually trying to achieve when forcing business to spend on training programs. The mainstream view of the function that training fulfils in the economy is that it enhances productivity. Economists usually feel at ease with this idea, which corresponds with their own notion of human capital acquisition dating back to Adam Smith. These people see training as an investment process through which the stock of skills is replenished and augmented. This is certainly the basic philosophy that the current government is using, but I think that such a model presents many problems.

  Some productive processes are self-evidently more capital intensive in the conventional sense than others, such as steel making compared with hairdressing or electricity generation compared with retailing.   Similarly, some fields are more human capital intensive than others, yet the presumption that this government has taken is that all occupations and industries should be measured in the same way. Whatever happened to the economies of scale? The government's crazy, oversimplified idea that all firms should spend 1.5 per cent of their payroll on training is certainly debatable on efficiency grounds.

  I have another concern with the basic philosophy of this training guarantee levy. I would have thought that the basic economics would suggest that, in order for the training process to be worth while, the value of the benefits must be equal to or exceed the discounted value of the costs. This seems fairly straightforward. I therefore cannot see the value to business of government making holidays to the Hong Kong Sevens and junkets to major resorts around Australia and the world an essential part of a training program. Essentially, this is what this government has done.

  As training is such a nondescript term and as loopholes can and will continue to be found with this current amendment, I think the government must start looking for new ways of providing quality training programs in Australian business and stop kidding itself that a certain quantity of training is the best way of providing quality training. Quality training and quantity training are two very different things. The government has, for all its good intentions, muddled up the two very badly with the training guarantee levy.

  Let us get a few facts straight about the abuse of the current training guarantee levy, which I see no solutions to in the current amendment bill. The training guarantee levy has been abused in the marketplace. It has often been used directly against the employee, who is just the person that this legislation is supposed to protect.

  Take the example of a company which is looking for a new permanent head of a section. It may be a very important position within the business. The training guarantee levy, in its current form, provides a mechanism whereby screening of potential candidates can take place. The training guarantee levy provides a cheap means by which the employers can observe workers in action without necessarily being committed to a long-term permanent contract. In particular, I argue that this has the potential for abuse among many youth training schemes. In a circumstance such as this, the training has not provided any relevant skills but instead has been used as a cheap and effective tool by employers looking for future potential managers.

  There is also the much cited problem with the training guarantee levy being used as a perk. The shadow minister himself alluded to the Hong Kong Sevens where doctors, lawyers and Australian business people were aided by the training guarantee levy to see a feast of good rugby. I have even heard of experiences in local government in which, having to utilise 1.5 per cent of its payroll in training, it was being used by elected representatives to attend conferences and the like. It is not targeted. The whole object of the debate today is as much involved with the abolition of the existing training guarantee levy program as it is with the amendment that is before the House at the moment.

  I urge the government, when we are dealing with this bill in committee and when the shadow minister moves the amendment to abolish the compulsory training guarantee levy, to consider not just the recommendations and the proposals being put forward by the opposition but also those recommendations that, as I have already mentioned in my address this evening, are contained within the government's own task force report. The chairman of that task force, who is also the boss of the trade union movement in Australia, Mr Kelty, has recommended to government that the training guarantee levy be put aside because it is definitely not targeting the people that it was originally meant to target.

  I admit that it is more than likely that the government introduced this in 1990 with all the good intentions under the sun, but it is not providing the correct training for the people that I believe the government meant it to target. It is not aiding employment at all. If anything, it is an impediment to employment.  During the MPI yesterday, when we were talking about the current level of unemployment in Australia, I mentioned a number of impediments to employment in Australia. This is just one of them. If the government is serious about the unemployment problem and the skills level in this country, it will seriously consider the challenge that is before it now, not just from the opposition but from all sections of the community, with regard to this training guarantee levy.

  I believe that the levy should be abolished. I believe that it is not training the people we should be training. As far as wage subsidies are concerned, a lot of the labour market programs and short-term training programs at the moment are not achieving anything. They are not creating any jobs. They are not getting people into work.

  Today we heard about the retention rates in senior years of high schools and the higher participation levels in tertiary education. Those people are being more highly trained in tertiary education, but there are still no jobs at the end of the road when they complete their higher school education or tertiary education. We are going to have a highly professionally skilled work force, but we will not have the number of skilled tradespeople that we need in this country if we are to have a manufacturing value added led recovery from this recession.

  There is a vacuum of tradespeople in this country. The training guarantee levy that is in situ at the moment will not provide those tradespeople. We have to abolish it. We have to retarget it. We have to direct the focus towards proper training of tradespeople in traineeships around this country. After the Second World War, we had to elevate immigration programs to get tradespeople to Australia because we had an economy on the go. If we can believe what the Treasurer (Mr Willis) is telling us, with his revised economic forecasts for 1994, we will strike this problem sooner than we think. Three years of this program has certainly done nothing to assist the situation. If anything, it has been an impediment.

  I now challenge the government to have a serious, genuine look at what it is doing. It knows that the results are not being produced. Bill Kelty knows that the results are not being produced. If the government is serious about the money that has been spent on these reports, it will acknowledge the recommendations contained in this report. I challenge the government to abolish the compulsory training guarantee levy altogether.