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Wednesday, 22 May 1996
Page: 1127

Mr BARRESI(7.17 p.m.) —I speak in favour of the proposed amendments contained in the Education and Training Legislation Amendment Bill 1996, on two grounds: firstly, the failure of the training guarantee scheme to make a meaningful difference to the effective skills and management development in this country and, secondly, that it has been a regressive scheme for business, in particular, on medium to small businesses.

I listened with great interest when the member for Batman (Mr Martin Ferguson) mentioned that when the training guarantee scheme was introduced it was necessary but that if businesses were left to their own devices they would not train. I have been involved in the training game for over 18 years and I can tell you that businesses have been training for a lot longer than when the scheme was first put into place.

The member for Batman also raised the Karpin report as a justification for the training guarantee levy, saying that companies needed to invest in training. I do not disagree with that recommendation from the Karpin report. It is important for Australian companies to invest in training. After all, the No.1 asset of their businesses is their employees. Do we do this through an imposition on business? I will be arguing that we do not and its imposition has been very regressive.

He also spoke of the need to invest in companies dealing with the export culture. I do not disagree that companies need to look at their export culture. I certainly have seen quite a few examples of organisations that could improve in that area. But is it up to government to impose what an organisation's culture should be or is it up to the organisation itself? I cannot think of an example when an organisation's culture has changed significantly, if at all, based on the latest ideological fad of a government.

There is a belief held by certain members of the House that all that is required to create a cultural change is to introduce a new tax and then spend the booty—tax and spend. Never mind that the country is in no position to afford such expenditure. The training guarantee scheme is the point at which this theory is put into practice. In particular, business has had to cop the excesses of this overzealous approach to taxation. The logic is: business makes the money, so it can afford to give it back.

It is not unfair to assume from the actions of the previous government that members in the caucus were saying, `Look, we can tax business because, even if the business community does not vote for us, we will always have the support of the battlers.' On 2 March those battlers moved away in droves. If business is asked to share a disproportionate amount of the tax burden to fund programs, even those programs that were created with the best intentions, then at the end of the day there will be no jobs to offer the battler and the battler will turn against those who tax the business that employs them. That is exactly what has happened.

Let us look at the financial impact of the training guarantee scheme. To date, collections from shortfalls have totalled around $2 to $3 million per year. In other words, the levy imposed on businesses was inadequate to cover the cost of running the scheme. No doubt the shortfall has been swallowed by the $8 billion black hole.

Allow me to put such expenditure into context. The coalition stated quite clearly throughout the campaign that the tax burden placed on businesses—the paper and compliance burden—would be reduced by 50 per cent in the first term. This is not the political climate in which we would proceed with unproductive programs which are costing the taxpayer dearly. A constructive review of all job training schemes is necessary and, in the case of the training guarantee levy, long overdue.

No-one is against the principle of developing and training that most valuable asset—the employee. The training guarantee scheme was created to increase the quality and quantity of training provided by industry—a noble endeavour. Let us examine the degree to which it has been successful and, above all, examine the cost.

The structure of the training guarantee scheme has never been appropriate. The setting of a minimum amount of expenditure simply did not work for business people in my electorate of Deakin, in Melbourne's east. The scheme was not administered in a way that suited the training needs of many businesses. It was expensive, time consuming and impossible to enforce to the letter of the law. In a last-ditch attempt to improve the scheme before it was suspended, a rollover provision was introduced. The reasoning behind this was that businesses desperately needed a degree of flexibility, and that businesses run their operations not necessarily year to year but within a much longer term framework. But even that is of little benefit to employers.

In my electorate of Deakin there are approximately 8,000 small businesses, most of them built up through the hard work of owner-managers. When the former Prime Minister said, `This is as good as it gets', he was talking about such small business. He was asking them not to hope for much more. I believe we can make things a bit better for such people, and the abolition of this scheme is an important step in that direction.

The legislation which put the scheme into place is symbolic of the former government's lack of commitment to small businesses. The Labor Party—shackled by the residues of outdated, left wing, ideological norms—never recognised the importance of small business as a job creator, as the true engine room of employment growth. Financial demands are being placed on those business people who are struggling to survive. We are making huge demands on their time and resources.

Where are the managers of small businesses in my electorate going to find time to get through all the paperwork? In my constituency those business people often do not even have time to spend a weekend with their families. They are toiling, trying to survive in a tough economic environment. Why make things harder? At the same time we are urging businesses to expand into the global market, and we are telling them that they are the masters of their own destiny in terms of world trade. Let us help them to get rid of these anchors which are holding them down—anchors such as the training guarantee scheme.

I talk about small to medium businesses rather than large businesses because it is widely known that it is small business that is being hardest hit by this scheme. I speak with some authority and experience on this subject. As I mentioned yesterday in my maiden speech, I spent most of my professional life working in human resources. Training providers I have worked with and spoken to have indicated that major big business employers have not had to change their training programs as a result of this legislation, and major employers have not been at all affected by the decision to suspend the legislation. Amounts of 1.5 per cent, if not more, of companies' payrolls have been and are still being spent by these companies on their employees. Business and employers in general do not plan their futures based, as I say, on such ideological principles.

It should come as no surprise to find out that the scheme did not significantly affect the training expenditure of big business. All we need do is look at the ABS figures to get a glimpse of this. The ABS figures reveal that, of the 58 per cent of employers who claim to have increased their expenditure on training, 38 per cent reported only a small increase. It is my impression that expenditure increase was more prevalent among small businesses. Big businesses did not even notice the scheme. Small businesses, of course, increased their expenditure—but only because they had to. It was a forced compliance.

Before entering parliament I worked, as I say, as a human resource practitioner with companies such as Kodak, Repco and a number of other large organisations. I also acted as a consultant for automotive, printing and financial industries. So I believe that I know something about the training programs of large companies in Melbourne, and the failure of this scheme. And as a former member of the American Society for Training and Development and the Australian Institute of Training and Development, and a continuing member of the Australian Human Resources Institute as well as the Organisational Psychology Board, I am fully aware of the vital role of training and professional development in the work force. Without good training programs, a company, while it may not necessarily be doomed, certainly is taking a backward step in its growth.

But for the previous government to apply big business training standards on smaller businesses, which are less capable of meeting the challenge, is simply unfair. It is like a flat tax on business. It is as though Rupert Murdoch were being asked to pay the same amount of tax as a small manufacturing business in Melbourne's outer eastern suburbs.

For those who have never had a chance to see how the scheme was implemented in the real world, it is important to understand the kind of training which is being offered to young Australians with that 1.5 per cent of the payroll of every business. The training provided is occasionally worthwhile and worthy, but often it is not. Often businesses, when confronted by the 1.5 per cent requirement, will opt to put the employees on unnecessary or downright irrelevant training programs. Small businesses understand the cost of employing training staff or qualified training advisers; at $1,500 per day for most of these training advisers, it is not cheap for a small business.

I have heard of an interesting example of how the scheme can go horribly wrong. I was discussing the issue with some of my con stituents and I came across what I call `the forklift syndrome'. A company needs to meet the 1.5 per cent quota fast. What does it do? It decides to spend some money building a training room—in other words, a type of conference room with a whiteboard, which will be used only occasionally. The company prefers to do this than give the government that 1.5 per cent which will not be put back into its business. More likely than not, it will pay for the wage of a bureaucrat who has been given the unenviable task of monitoring this mess.

But back to the forklift example. The following year the company decides to spend the cash on forklift training. It decides to spend that 1.5 per cent by giving everyone forklift driving certificates—never mind that only one or two employees will actually have the responsibility of using a forklift. I ask the opposition: how have we helped that company; and how have we helped Australia with the training guarantee levy when it is such an impossible scheme to enforce?

Debate interrupted; adjournment proposed and negatived.

Mr BARRESI —I am sure that the opposition may call it multiskilling. I call it a waste of resources that could be better spent creating jobs for young Australians. At the heart of the issue is: what do we mean by training—do we mean spending money or providing experience that will better equip Australians to tackle the workplace of the future? In many small businesses, the best training is in fact hands-on work experience.

As if all of this were not evil enough, some of Australia's unions have decided to join the fray. Several group training providers have told me of their encounters with unions. I am appalled by what I have heard. The CFMEU has attempted to introduce a training levy into enterprise bargaining agreements. The deal is that companies pay their 1.5 per cent—or whatever the levy may be—into a union fund and the union then agrees to provide training in industry. To an outside observer it would appear that there is nothing sinister in this agreement, in the same way that to an outside observer the training guarantee scheme may seem like a good way of providing Australians with quality training.

Let us have a look at how the unions plan to put the scheme into place. In a nutshell, it is like a union super levy—a way for unions to accumulate power and to control money. There are no assurances that the company that coughs up the money, that coughs up the levy, in the first place will actually receive the benefits—receive their quota of the training dollars.

I will give you an example of how this works. In my electorate in Melbourne's east it is an issue of particular relevance. The Outer East Training Group in Ringwood took the ETU to the Industrial Relations Commission because the union was promoting its own training arrangements and then muscling companies into accepting only workers trained through their schemes. The companies that decide not to go along with the deal will then presumably be banned by the union. The Outer Eastern Training Group is one organisation challenging the ETU on grounds of restrictive trade practices. (Quorum formed)

I also rise to speak on this bill on the basis that it has failed to deliver effective skills. The findings of the Karpin report present us with a clear indication that the trainee guarantee levy has failed to deliver on its principle objectives. The scheme had the purpose of increasing the quality and quantity of training provided by industry. The Karpin report was commissioned after the March 1991 economic statement—no doubt as part of then Prime Minister Bob Hawke's grand vision of turning us into a clever country. We know how much of a noble vision that has become. All we need to do is to ask the former minister for science, Barry Jones, for his views about that issue.

Arising from this strategy, the industry task force on leadership and management skills came down with some findings—the Karpin report. The task force identified that imparting management skills is about upgrading the capability of TAFE and business support, harnessing the talents of diversity and achieving best practice management development. The training guarantee scheme is not the means to achieve these ends. I would venture to say that achieving best practice is a far more effective means of proceeding, as companies that embarked on the ISO 9000 programs have demonstrated.

It is through such competitiveness amongst the companies themselves to achieve these standards that we are finding companies investing money, finances, resources and time into training. They do not need the imposition of a scheme. I speak on this subject with some authority. Back in the 1980s when I was involved with Kodak, with Ford and Nashua it embarked on total quality management. I have seen, as part of that, other companies trying as much as possible to regain the competitive edge. (Time expired)