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Wednesday, 22 June 1994
Page: 1821


Senator BELL (9.58 a.m.) —The Training Guarantee (Suspension) Bill 1994 effectively suspends the training guarantee levy for two years. We support the bill and we welcome the government's progress towards the adoption of the proposals that were put forward by the Australian Democrats at budget time. In our 1994-95 budget submission we recommended a suspension of the training guarantee levy. At that time we recommended a suspension for three years and a replacement of that levy with a 10 per cent training investment allowance. We see some progress towards that.

  I acknowledge and support Senator Gibson's call for incentives rather than punitive measures. I recall depicting that in one of my press releases at the time as the need for more carrot and less stick. We have here some progress towards that with the removal of the stick; however, we are still waiting for the rest.

  The Democrats understand the fundamental importance of training in the workplace—especially in times of rapid change such as we are witnessing now—and the need for skill development and re-skilling as entry level jobs are harder to come by. In our support for this bill we do not see that we are deviating from that.

  The Australian Democrats supported the introduction of the training guarantee levy in 1990, but at that time we also made clear our concerns about the nature of the levy legislation. At that time we welcomed in principle the concept of the training guarantee levy as a means of ensuring a more equitable distribution of the costs of training amongst employers in Australia but moved a series of amendments. Those amendments sought partial devolution of the responsibility for the bill's administration away from the Australian Taxation Office to peak industry bodies.

  We also sought the inclusion of a depreciation clause for capital expenditure on training and an exemption from some of the more specific requirements of the bill for those firms that could demonstrate that they already had and would continue to have exceptional commitment to training. We also sought the inclusion of study leave, occupational health and safety, and industrial relations as eligible training expenditure. At that time we succeeded in removing some of the elements of uncertainty which were evident in the draft bill, and here I thank former Senator Michael Macklin who succeeded in making major changes to the bill with regard to accountability and methodology.

  The Democrats consulted widely with different industry, academic and union bodies at that time and have done so since to determine their attitudes towards the legislation. We find that many of our initial concerns are reflected in the problems that have arisen with the legislation over the years. Those problems include such things as the dubious accreditation of some training schemes and certain practices which could only be described as rorts on the part of both employers and employees.

  When the last set of training guarantee amendments came before the Senate, the Democrats referred them to a Senate standing committee in the belief that it was time for a review of some of the claims that have been made about the scheme, its benefits and its disadvantages. At that time we were particularly concerned about the number of employers who were paying money directly to the taxation department. As I recall, something like $5 million had been paid directly to the taxation department in lieu of spending that money on training or in lieu of making a donation to an education institution.

  I said at the time that I really could not understand why anybody would not make a donation to an educational institution rather than be required to pay the levy because, as Senator Watson would know, such a donation is tax deductible. I was amazed that businesses made themselves liable for that levy but part of the reason was the administratively heavy and time consuming calculations that needed to be made to determine just what was payable. So some businesses adopted the attitude of, `I can't be bothered dealing with all the calculations here, I will just pay whatever I have to pay.' That pointed to another deficiency in the scheme—the onus was at that time placed on employers.

  At the time the Democrats also expressed concern about where this money was being directed. Was the money that was received by the ATO going back to the states, as originally promised, or was it simply being used for the administration of the levy? Of course, the administration of the levy was costing more than was being collected. It was never intended to be self-funding from its collections—the government at the time probably hoped that it would not collect very much money at all—but that was not the problem. The problem was what was happening to the money that was being collected.

  They were our concerns. Nevertheless, we have long supported the increase of educational and training opportunities in this country. We also support the concept that there should be greater responsibility by employers towards training. We have never supported outright the opposition to the scheme which sometimes has been expressed by the coalition. We have simply looked at its faults of administration or its delivery.

  We have heard consistent complaints about the training guarantee levy. Even before its implementation in July 1990 it was criticised—before it had a chance to take effect. The complaints have ranged from practical concerns, some of which we share, to other expressions which are simply a philosophical rejection of encouraging training, a philosophical position which is that the market is supreme and will determine all that is good. We reject that just as that position rejects the concept of encouraging training by government intervention.

  As part of the Democrats' ongoing commitment to small business, which has been a feature of our policy since our inception, we are concerned about the rising on-costs, compliance costs, for business. I see Senator Panizza's ears twitching as soon I say that because he has been a constant advocate of looking at ways to reduce those costs as well. We recognise these costs, especially their effect on smaller to medium sized enterprises. More than half of all new jobs created in Australia since 1990 have been in small businesses. We believe as a party that this sector must be nurtured. It is the backbone of our country and that has not been denied by anybody.

  The latest statistics from the Australian Bureau of Statistics show that on average employers spent the equivalent of 2.9 per cent of gross wages and salaries on formal training in the September quarter of 1993. That amounts to $1.1 billion on formal training. We acknowledge that there is a considerable amount of on-the-job training which is not identified in that figure. Per employee, that figure represents employers spending $192, a rise of 18 per cent since 1990. That was the time of the introduction of the training guarantee levy. In 1990 employers spent $163 per employee on training. So in fact there has been an increase in the amount spent on training in Australia. However, the amount of time spent in training by employees was reduced from 5.9 hours in 1990 to 5.6 hours in that September quarter I quoted.

  Those who are listening can appreciate immediately that it is difficult to evaluate whether this scheme has encouraged money spent in a worthwhile sense on training. It may be possible to identify an increased amount, but whether this scheme has been responsible for it is difficult to determine. It may simply have been the wisdom of the employers, recognising that training provides a benefit in greater skill and productivity of the workers. It is also impossible to evaluate the quality of the training that has been conducted. While we notice a reduction in the hours, there is no measure which can determine whether those hours were more efficiently spent in the training sense than were the previous set of hours.

  We still have a situation where the Public Service spends a higher proportion of wages and salaries on training than does the private sector. The most marked difference is in the ACT. Some might say, `Well, that could be predicted,' but in the ACT the fact is that the public sector spent 5.4 per cent of wages and salaries on training compared with the private sector which spent only 1.8 per cent. Again, though, that may be a function of the size of the enterprises involved and the nature of the enterprises involved. So the raw figures make it very difficult to evaluate either the quality or the reasons for training.

  I would like to refer to what has been water under the bridge in this whole debate. Some of the justifications for the original scheme and some of the excuses given for not considering a suspension of the scheme earlier are excuses which we are still hearing. I would like to address those. I remind the Senate that at the inquiry which I made reference to earlier—the previous time this bill was before the chamber I referred it to a committee—Senator Schacht, who was at the time representing the minister and responsible for small business, in presenting evidence reminded the committee that there are approximately 800,000 small businesses in Australia.

   The committee was told that only 70,000 of those businesses were required to meet the training guarantee levy. Only 70,000 businesses qualified by dint of being within the payroll threshold. So, obviously, 730,000 small businesses have not been affected one way or another by the application of this levy. The committee was also told by the Australian Taxation Office that only 500 out of the 800,000 small businesses did not take the trouble to meet their requirements and therefore had to pay some sort of levy. The amount derived from that in 1992-93 was $3 million.

  We need to be keep that fact in mind when we hear justifications being trotted out for the claim that this scheme is going to solve the problems of occupational health and safety non-compliance, ignorance in work practices and the lack of training provided by all employers. It could never do that if 730,000 small businesses were not included in the scheme.

  I have already mentioned the difficulty of evaluating the quality of training provided. I remind the Senate that the very problems that were supposed to be solved remain untouched because of the number of businesses not caught up in the scheme. We heard a lot about this in the debate in the other place. The honourable member for Bass, Mrs Silvia Smith, quoted to us some findings from the ACTU's national occupational health and safety coordinator, Ms Renata Musolino, who said in part:

Most employers provided adequate training but many companies, particularly small businesses, neglected their responsibilities—

especially in occupational health and safety. We were told in that debate in the other place:

The training guarantee slots straight in with the concept of the level playing field. It also means that the good corporate citizens who train their employees do not have their staff poached by corporate parasites who do not train. This is achieved by the blanket requirements of the training guarantee.

I suggest that it is anything but a blanket requirement because of the reliance on that payroll threshold. The effect was the opposite. Those small businesses that were large enough to be caught within that net were penalised. At least 730,000 small business were able to abrogate their responsibilities and therefore the scheme did not do what it was claimed to do. It did not provide blanket coverage and it did not provide a guarantee from poaching by lazy employers who wanted somebody else spend the money in that area for them.

  It is necessary to ensure that employers recognise and provide training particularly in the area of occupational health and safety. This scheme never did, and never could, force people to meet their obligations. Apart from this scheme being incapable of guaranteeing quality training, it is also incapable of guaranteeing blanket coverage. Keeping those inadequacies in mind, I believe we are doing the right thing in ensuring that there is a proper revision of this scheme. While recognising its faults, the scheme will be discontinued while that revision takes place and this whole business addressed.

  This bill will allow employers with a shortfall in the 1993 financial year to pay by September 1994, or they can postpone the shortfall and provide training in the two years of the suspension. The bill is expected to have minimum financial impact. In fact, the explanatory memorandum states that there will be a small saving in administrative costs. I would be curious to hear the amount that the government expects to save from these amendments. I think we have already canvassed that idea, so I will not toy with it any more.

  I do not want to hear the government saying that the reason for suspending the training guarantee levy is that it has achieved its purpose. Any attempt to use figures of increased spending or figures which show a greater number of participants is susceptible to the accusation that the government does not know the cause of the increased spending, does not know what the effect of that increased spending has been or could be. If the government trots out that line, we should view it with cynicism.

   The Kelty task force on regional development has been mentioned. We should acknowledge its recommendation that the training guarantee levy on businesses should be suspended for three years. It also recommended that company tax rates should be increased by one percentage point and that companies which take on trainees or apprentices would be able to deduct all unsubsidised costs for such employees from the one per cent, in addition to the normal wage deduction allowable from before-tax costs.

  There is widespread endorsement of the objective of this bill, which suspends the TGL for two years. Perhaps during that time we can examine any attitudinal changes there might have been towards training in this country. Perhaps in that time we will recognise and be able to correct the faults of using too much stick and not enough carrot. The Democrats support the amendment moved by Senator Gibson.