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Thursday, 3 February 1994
Page: 380


Mr BRADFORD (6.20 p.m.) —For the information of the honourable member for Capricornia (Ms Henzell), the good news is that, ultimately, we support these changes, although the bad news is that we support them only as a second-best option and a last resort. In fact, we intend to move an amendment which effectively states that we believe this act should cease to have total effect from 1 July 1994. In other words, we are still totally opposed to the concept of this particular training guarantee levy.

  From what the honourable member for Capricornia said, I think she still believes and perpetuates that great other lie: `I'm from the government and I'm here to help you'. Let me tell the honourable member for Capricornia, in case she does not know—and if she moves amongst the businesses in her electorate, she will soon find this out—that most businesses live in fear of that promise. In fact, I am sure that most of them regard it as a threat. I ask the honourable member for Capricornia to think about this question because the debate on this issue hinges on the answer: how far does the government want to go ultimately in telling people how to run their businesses? Most businesses in this country, particularly small businesses, as they are the ones that suffer most from these sorts of levies, as the government euphemistically calls them, are already operating in a bureaucratic straitjacket that makes their very surviv

al or existence on a day-to-day basis very difficult indeed.

  I do not believe that anyone in this place—we on our side certainly do not—underrates the importance of training at all levels in and out of industry. There is no doubt in my mind—and there never has been—that training is an absolutely vital component in Australia's urgent quest to become internationally competitive. Obviously, training is an important part of balancing that particular equation.

  In my analysis of the effect of the training guarantee levy—and I have closely observed it first-hand in a number of business environments—it has simply failed in many ways to achieve its objectives. Superficially and quite correctly, I suppose, the honourable member for Capricornia alluded to instances where people have said, `We're using the levy; we're spending the money on training. It is effective in that sense', but this fails to take account of the very practical ways in which this particular approach fails to reach its ultimate objective.

  The most common complaint about the levy—and it has been referred to in this debate on a number of occasions—is that it simply makes it more difficult to do business. It increases businesses' costs. It increases the cost of keeping records and paperwork, which is not insignificant for this particular training guarantee levy. It has brought to the attention of some companies the level of expenditure on training and, ironically, some of them have found that they are spending too much on training. From talking to some people, I believe it has actually led to a reduction in the amount of money that companies are spending on training.

  Ultimately, the training guarantee levy fails because it really only ends up being a tax on jobs. This is the bottom line. All taxes on business translate directly into lost jobs. That is why, philosophically, we are poles apart in this place in a debate on an issue such as this, particularly when unemployment is the greatest problem, both socially and economically, that Australia faces today.

  In an environment such as the one in which we exist now, there is an urgent need for businesses to create jobs. One is easily able to make a connection between, say, the number of small businesses that exist in Australia and the existing level of unemployment. It may be trite to say it, but it is a fact that, if every small business in Australia could employ one more person, that would overcome the unemployment problem. I am not suggesting by any means that it is as simple as that; it is not. But it makes the point that there is a direct correlation between adding to a business's costs and a business's ability to employ new people or, more importantly in some respects, to maintain the employment of existing staff. That is very often what this boils down to. As the government adds to business costs, business is forced to decide whether it can maintain its existing levels of staffing.

  Time and again we have observed that, as a result of not only this levy but also other government charges and bureaucratic requirements of business, businesses have been forced to make a decision to reduce their level of staffing. Therefore, there is a direct correlation between staffing levels and the cost of doing business, which includes all costs—not only government levies, charges and taxes.

  Every time we hear the word `levy'—and that is what the government wants to call all these things; for example, the training guarantee levy, the superannuation guarantee levy and, dare I even give the government any ideas, the proposed jobs levy—we simply have to substitute the word `tax'. We cannot beat around the bush and talk about levies. What we are talking about are taxes. If ever there was a time to take taxes and charges off businesses, it is now, for the reasons I have already outlined.

  There has already been mention in this debate about the fact that the own task force on regional development of the Prime Minister (Mr Keating) was against the training guarantee levy and there has been an attempt by the honourable member for Capricornia to rationalise that particular decision. But the task force made that decision on very good grounds. Its members were out there, running around Australia and looking at what was actually happening on the ground and, as a consequence of that, they made that recommendation.

  We do not need to look far to see the ways in which a levy is `not providing the training it was designed for'. I have heard of cases where all day training seminars are held in five-star hotels and turn out to be nothing more than a smorgasbord morning tea, lunch and afternoon tea with a sporadic half-hour lecture thrown in for good measure. I realise that there are limitations and requirements.

  I am reluctant to talk about the five-star hotels that do it because some of them are in my electorate. But to be intellectually honest and, I suspect, politically correct, I need to say that, even if something wrong is occurring in my electorate, it is still wrong. I do not think we can play down the fact that this has occurred. Whilst in a way we might be able to say that the money is being spent on training, it is obviously stretching the word `training' to an extreme. We could talk about long weekend training seminars on islands which I will not mention, as many of them are close to my electorate and that of the Assistant Minister for Industrial Relations (Mr Johns), who is at the table. This thing goes on. This is not ultimately genuine training activity at all.

  There are some people in the training industry—and I have some friends amongst them, so I need to apologise to them for having the courage of my convictions here today—who are obviously doing very well out of the training guarantee levy, but that is not the purpose of it. It has created a tremendous business opportunity and, in terms of the status quo, a genuine business opportunity. But, in that sense, it is being abused.

  In my view, it is no wonder that, with all these pressures, many small businesses have closed their doors. Many of them are being forced to move offshore. I refer to a business in my own electorate of McPherson. Representatives of a furniture manufacturing company—and there are a couple of those companies in my electorate—came to see me recently and pointed out how difficult they were finding it to cope in Australia at the moment. They were particularly critical of tariff reductions. Ultimately, I convinced them, because this is what I believe, that it was not the reduction in tariffs that they had the real problem with. After all, as I see it, tariff reduction is a vital ingredient in the quest for us to become internationally competitive. The problem was ultimately with increasing government costs. They were able to target directly the training guarantee levy and the superannuation guarantee levy as particular costs which were causing them problems.

Sitting suspended from 6.30 to 8.00 p.m.


Mr BRADFORD —At the moment we are dealing with the Training Guarantee (Administration) Amendment Bill and before I was interrupted by the dinner break I was indicating that the opposition intends to move an amendment in due course which will effectively scrap this training guarantee levy completely, notwithstanding our general support for the provisions of this bill which effectively improve what we regard as being fundamentally flawed legislation. Let me reiterate that our objection to this and our objection since it was introduced by the government is essentially based on the fact that firstly, big businesses are already spending at least the amount of the levy and in fact some of them, having had that brought to their attention by virtue of the levy, may well have been discouraged to reduce their expenditure on training and, secondly, small business cannot afford to meet the commitments of the levy, even the more flexible commitments which are being brought in by this legislation. I use the word levy fairly loosely because it really is a euphemism for tax. As I was saying before the dinner break, we are opposed to increasing the tax burden on business.


Mr Filing —A tax on jobs.


Mr BRADFORD —It is exactly what the honourable member for Moore says it is. As I was pointing out before dinner, it is simply a tax on jobs. There is a direct correlation between taxes and charges on business and business's ability to create jobs or, as I was saying, even more importantly perhaps, to maintain levels of employment.

  This was introduced in what must have been emphatically the worst possible time, in the middle of a recession. It was, of course, another imposition on business and businesses at that stage were downsizing, down staffing, and this was a further nail in the coffin. The honourable members on the other side do not seem to understand this connection, that business essentially must maintain certain cost levels if it is to maintain its staff, otherwise staffing levels fall.

  Our approach in part to solving the unemployment problem, which we have acknowledged on both sides is the single biggest social and economic problem facing Australia, is to allow business to get on with its job of creating jobs. The way to do that is not only to not impose further taxes on business but actually to go about methodically reducing business's costs by removing taxes and charges. The other element of this particular levy that concerns business is the very fact that it involves administration expense in complying with the law. For most businesses it is a considerable and unnecessary burden and that is our concern.


Mr Adams —What is your policy on training?


Mr BRADFORD —Our policy on training is quite different in its effect; we recognise the importance of training. As I said when the honourable member was not here earlier, we understand that training is a very important part of the desperate need to make Australian industry competitive. But we simply do not subscribe to the point of view that the government does that seems to be that it can impose these sorts of solutions on businesses. Where does it draw the line? How far does it want to interfere in a person's right to run his or her business or a company's business as he or she sees fit?


Mr Adams —What about the national interests?


Mr BRADFORD —The national interest in this case is served by job creation.


Mr Filing —More jobs.


Mr BRADFORD —As the honourable member for Moore says again. The answer of course to training is to educate businesses on the importance of training—that is not a difficult process. Importantly, if we allow business to operate unfettered to a greater extent than the government philosophically wants to, then simple pressure of competition will ensure that businesses spend money on training.

  Those honourable members opposite have no idea. They do not know anything about running businesses. For most businesses every expenditure decision boils down to a cost benefit analysis. It is not difficult to demonstrate that there are benefits for business in training, as there are benefits of course for the nation. Businesses, big and small, can be convinced and shown that there are benefits in training for them; they do not need to be forced. How far do we go in forcing them? We have got the training guarantee levy, the superannuation guarantee levy, jobs levies, payroll taxes, all sorts of other taxes and charges and the government wonders why businesses are putting people off. The answer appears, at least to me, to be so obvious that I wonder why the government does not get the message.

  Before the dinner break I was referring to a particular company in my own electorate which came to me as it was having difficulty surviving in a competitive environment. When I went through its figures with a trained eyed—I suppose I could say that modestly—I was able to identify that its costs were too high for it to be viable. We identified particularly things like this training guarantee levy which was a cost to the company. Many businesses, of course, are prepared to spend money on training but it becomes quite ludicrous when the training guarantee levy forces them in effect to go out and find what are very often just mickey mouse types of training opportunities or even send people on courses and programs which really are not much use to them because of this bureaucratic heavy hand hanging over their heads.

  The scheme does not work. As I was pointing out before when the honourable member opposite was not here, even Mr Kelty in his regional task force has recognised that. It must have taken some digging for it to find that. But even in its recommendations it has come to realise that the scheme does not work.

  It is for these reasons that we are opposed to this levy and it is our intention to move an amendment which, hopefully, some of the sensible people on the other side who have actually had some exposure to business and understand the connection between business viability and cost structures might even be moved to come and support. They would be having the same input from many of their constituent businesses that this training levy is not working and it just becomes an impost as far as business is concerned.

  I wrote to the former minister for industry, the honourable member for Maribyrnong (Mr Griffiths), about this particular company that was having difficulties. Its initial problem, to put it in context, was that it was experiencing some severe competition and it was concerned about the reduction of tariffs and I explained to it that another ingredient in making Australia more internationally competitive was in fact the governments's move to reduce tariffs to a lower level over time and in general we have supported that. The minister in his reply said:

It is a disappointing to note your comments about the industry's view—

this particular business is in the furniture industry—

of the training guarantee levy as an imposed cost. Training is not an unnecessary cost on operations, but an essential part of improving productivity and there are always new skills to be learnt in any business, if a firm wishes to remain competitive.

I make no apology for the government's training guarantee levy as I consider that any firm not spending at least one and a half per cent of its payroll on training will rapidly fall behind in the competitive stakes.

The minister is using the approach, `I'm from the government; I'm here to help you'. All businesses fear this more than anything. All businesses want to remain competitive; they are not stupid. Most businesses can easily be convinced that it is in their interest to spend money on training. I will strongly support in due course the amendment to be moved by the opposition to throw the training levy out.

  Debate interrupted.