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Thursday, 3 February 1994
Page: 389

Mr BRUCE SCOTT (8.35 p.m.) —I rise tonight to speak on the Training Guarantee (Administration) Amendment Bill 1993. I am pleased to be following the honourable member for Perth (Mr Stephen Smith) because during his speech he suggested that he had not scoured the papers of this nation to see whether there was an endorsement of the changes that are being made or, in fact, of the training guarantee levy. I will bring to the House's attention some of the comments that have been made by industry groups through the nation's papers. It is just a pity that the honourable member for Perth did not take the time to read what industry, the job creators, the people who pay the bills, the farming organisations, are saying about this iniquitous tax.

  Changes to the training guarantee levy are really an annual event in parliament. It is a bit like the Melbourne Cup. We know that a bill will come around every year and we know that there will be more changes. We can bet our lives on the fact that there will be some changes because the government constantly struggles to bring this wayward animal, the training guarantee levy, to heel. This levy must be brought to heel.

  The training guarantee levy is—we should all know; we have debated it so many times—an attempt by the federal government to force employers to train their work force whether they need it, whether they can afford it or whether they even want it. It is forced on them by the federal government through the provisions of this bill.

  The levy was originally introduced in 1990 and required enterprises with a payroll of more than $200,000 to spend one per cent of their payroll on approved formal training. As we all know, that formal training has come in for quite a lot of abuse since the introduction of this bill. Those who did not spend the one per cent would be forced to pay that percentage of their payroll to the government. The levy has since risen to 1.5 per cent and the payroll threshold has risen to $222,000.

  The changes proposed in this piece of legislation will marginally improve the system's flexibility, but it really is a classic case of rearranging the deck chairs on the Titanic. Like the Titanic, this bill will go down—perhaps not this bill in this House tonight, but ultimately it will go down. It is certainly destined to bite the dust.

  I make this prediction on the basis of the recommendations of two of the government's most lauded and recently launched advisory reports: the Kelty regional task force report and the green paper Restoring full employment. The Kelty report explained the administrative costs and the potential abuses of the training guarantee levy. It states:

Regional employers said the TGL had created an administrative burden and was failing to provide the training for which it was designed. The Taskforce was told that while many employers where committed to providing training for all employees, other employers were distorting the intent of the program by spending training money on, for example, executive training weekends in luxury resorts. . . Given the problems with the TGL and the fact that it has not provided training for the groups which really need it, the Taskforce believes it should be suspended.

This is the Kelty task force, which travelled right across the country. My understanding is that it was granted a million dollars to bring this report to government and the report recommended that the training guarantee levy should be suspended.

  The report goes on to recommend a three-year suspension of the training guarantee levy and a one per cent hike in company tax. But that is another chapter in an ongoing saga of this government's attack on private enterprise—and I will not digress on this occasion. But if the Parliamentary Secretary to the Minister for Industry, Technology and Regional Development (Mr Lindsay) sums up on this bill tonight, I will be interested in hearing his comments on the recommendation that the Kelty task force made on the training guarantee levy. Here we have a bill which has come before the parliament which will make mild adjustments to the training guarantee levy while the government must be considering the recommendations of that Kelty task force.

  The government's jobs paper was a little more veiled in its assessment of the training guarantee levy but, nonetheless, critical. It states:

The major deficiencies in our current education and training systems appear to lie in the area of vocational and workforce training.

Is that not the exact area which the training guarantee levy was introduced to address? The government's own green paper states that there are `major deficiencies in our current education and training systems'. That is what the training guarantee levy was introduced to address, yet four years after the training guarantee levy has been introduced we have a government green paper being critical of the very area that the training guarantee levy was meant to address. If one of our greatest weaknesses continues to be vocational and work force training, then the training guarantee levy is clearly an unmitigated disaster, even by the government's own standards, as suggested in the green paper. However, it appears that the minister is quite determined to lumber on with the baggage of the training guarantee levy. The training guarantee levy is really quite beyond salvation.

  Whilst the moderate changes provided for in this legislation are useful, there is no escaping the financial costs, the administrative burden and the potential for abuse which are associated with the training guarantee levy. It continues to amaze me how even this government could dream up such a convoluted scheme which has inevitably hurt the good businesses and simply been avoided by the bad. It should have been abundantly clear that good business enterprises will train their staff to appropriate standards without the heavy hand of government to remind them of the need to do so. It is simply good business to train where training is required. However, without the imposition of the training guarantee levy, wise businesses would have been spared an unnecessary administrative burden and been able to base training decisions on what the company and its employees needed rather than some arbitrary government figure.

  Some businesses of less repute probably do not train their staff as they should. Such enterprises are unlikely to be around for the long haul. But, in any case, compelling them to train staff with the threat of financial penalty will result in one of two outcomes: they will get their staff in the first training option that comes along, good or bad, because they are not really committed to training as long as they spend the money on training; or, alternatively, they will rort the whole scheme. There are reams of supportive anecdotal evidence around that tell us the story of the middle management conferences in establishments such as Club Med and the like. One does not really need a fertile brain to imagine what sort of training conferences would be carried out at Club Med. But there is plenty of anecdotal evidence that shows that many middle management schemes go to these places under the guise of training staff and which then write it off against their training guarantee levy commitment.

  These basic flaws in the training guarantee levy are confirmed by a recent survey of employers conducted by the Australian Chamber of Commerce and Industry. The survey found that, although training had increased in just under half of the firms surveyed, in many instances the training had not been required and did not address the specific skills shortages. It appears that many companies were forced to spend a lot of money on a very pointless exercise at a time of unprecedented economic downturn when they could least afford it.

  There are plenty of people in businesses in my own electorate of Maranoa who have been to see me in the last couple of years and said, `Survival is much more important than training staff. When you are putting off staff to survive, you haven't got the money to put into training, and it is a case of the business surviving until the economy turns and then you start to get on with the job of training'. But it was a pointless exercise for many to continue to train staff while putting staff off at the same time.

  The survey goes on to record that two-thirds of the surveyed firms felt that the training guarantee levy had not led to any improvement in training; half of the firms surveyed recorded significant increases in costs as a result of the levy. It is perhaps pertinent to bear in mind that training needs vary enormously from company to company. Company A may need to splurge on training in one year to cope with new equipment and better technology in which they may have invested but will then only spend a minimal amount in subsequent years. Company B may have access only to the specialised training it requires every three or four years and spends nothing in the interim. I suggest that there are many firms like that in regional and remote Australia because access to some of the training they wish to involve their staff in is, in many cases, far removed from their place of work.

  Both companies could end up with exceptionally well trained work forces, but they would fail the arbitrary tests enforced by this government and be penalised. Alternatively, they could meet the government's target with unnecessary training programs. Whichever way we look at this, it is the businesses that bear the cost—the pointless cost—forced on them by this training guarantee levy.

  The honourable member for Capricornia (Ms Henzell), who spoke prior to the dinner break, suggested in her contribution to this debate that business does not appreciate this cost. This is one of the members of the government—the honourable member for Capricornia, an electorate on the central Queensland coast. If she had cared to read this morning's Canberra Times, she would be aware that business certainly does not appreciate the cost. In reference to this piece of legislation, the Executive Director of the Australian Chamber of Commerce and Industry, Bryan Noakes, is reported as having said that the changes:

. . . appeared to only slightly ameliorate what his organisation believed was a bad and counter-productive impost on business.

That is from the peak employer body, the peak employer organisation, which represents chambers of commerce and chambers of industry right across this nation. That is what it had to say about it. The Industrial Director of the National Farmers Federation, James Ferguson, is reported in the Canberra Times as saying:

. . . regardless of the Government's intentions, the Training Guarantee Charge still represented an additional cost to employers which should be totally removed.

That is what the National Farmers Federation—another employer group—thinks of it. If honourable members read the Canberra Times this morning, they would also have noticed that the employer groups have been caught by surprise by important government changes to the training guarantee levy scheme. Apparently, there has not been much consultation with the industry on this bill; they have been caught by surprise. The government could do well to heed the advice of the people who pay the bills.

  It is a pity that the honourable member for Perth did not scour this morning's papers either. In his contribution he said that he had not done so. I would have thought that the first thing that every member of parliament did on getting up in the morning would be to scour the papers to see what they had to say and were reporting.

  The complete inappropriateness of the scheme is demonstrated by the magical formula of 1.5 per cent of company payrolls which underpins the training guarantee levy. Exactly how did the government assess that that level would adequately train every work force in the country, from top-notch legal firms to funeral directors to used car outlets? The parliamentary secretary might throw some light on that subject at the end of the debate. I doubt whether much thought or analysis went into the scheme at all. I believe that the 1.5 per cent formula was a stab in the dark. It made the government appear to be responding to the training crisis when in fact it was doing little more than slapping a new tax on businesses.

  Aside from the clear ineffectiveness of the scheme, it is chilling to consider how many jobs the cost of the training guarantee levy may have ruled out. Then again, the human cost of indirect taxes on businesses has never really been a concern of this government. We only have to look at the unemployment queues—and they are still far too high in this, the lucky nation—to understand that the human cost of mismanagement by this government has been borne by the million people who have not got jobs as well as by the many thousands of small businesses which have had to close their doors because of the recession that the Prime Minister (Mr Keating) once said we had to have.

  The government has continued to pursue compulsory superannuation, payroll tax, fuel tax and sales tax with such vigour that one wonders whether the government is really determined to cripple small and medium sized businesses and wipe out thousands of jobs in the process. We only have to look at the taxes that were slapped on everyone in this nation in the last budget and the reception that it got by the people of Australia. It was all about more taxes.

  Not only does this training guarantee levy drain funds which could be better spent contributing to the wages of a new employee, but the addition of a new staff member blows out the payroll and consequently increases the company's training obligation. A refrain that I constantly hear from businesses throughout my electorate and all across the country is that the cost of employing new staff and meeting the government's administrative requirements is simply prohibitive.

  The training guarantee levy has got to go. If the government's continued attempts to modify the scheme are not sufficient evidence of its inflexibility and irrelevance, the results of various surveys and anecdotal evidence should confirm that it is a very expensive mistake. Unfortunately, the cost is not being borne by the government but by the productive heart of the economy and by young job seekers who have been priced out of employment markets by the government's obsession with indirect taxes.

  The National and Liberal parties have opposed the training guarantee levy since its inception. Unlike the government, the coalition has a longstanding commitment to removing indirect taxes which cripple small and medium sized business. It is, after all, these enterprises which will lead us out of this recession and provide jobs for many of the thousands consigned to the dole queue by the anti-growth policies of this government.

  If any of my colleagues on the other side of the House are courageous enough to admit that the training guarantee levy was a costly and damaging mistake, I urge them to support the coalition parties' amendment which provides for its imminent demise and eventual abolition. I support the amendment that we will be moving in this chamber. I believe it is the sensible approach to this bill and I look forward to seeing some support come from the other side of the House if there are any courageous members on that side.