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Wednesday, 22 June 1994
Page: 1832


Senator COOK (Minister for Industry, Science and Technology and Minister Assisting the Prime Minister for Science) (10.59 a.m.) —We are debating the Training Guarantee (Suspension) Bill 1994, which is a bill put forward by the government to suspend the payment of the training guarantee levy for two years.

  There have been a number of speakers in the debate but the principal focus has been to indicate, in the case of the opposition, that the bill does not go far enough and that the levy should be removed completely. The opposition has moved an amendment to that effect. The Leader of the Australian Democrats, Senator Kernot, has given the government a spray for a massive social reform approach in the white paper Working Nation to encourage people to get back into work, but she indicated that her preferred position would be for the training guarantee levy to be substituted for a tax incentive, as she termed it.


Senator Kernot —Phasing it out.


Senator COOK —She also indicated that the training guarantee levy should be phased out. She indicated in her closing remarks—I acknowledge this and thank her for it—that the Democrats will be supporting the bill in its passage through this chamber. As the duty minister representing the government, I am required to reply to the debate on behalf of the government. It is obvious that the bill will now pass this chamber, and it is important that it does.

  It is often said that a nation's greatest asset is its people, and nothing is more true of Australia than that statement. Yet the sad fact is that Australia over many years, until this government came to power, has progressively been deskilled. In modern society we see that apprentices graduating from their indentures and becoming tradespersons will during their employment life have to be trained or retrained between three and eight times in order to keep pace with the exploding changes in technology and with the changes in new processes and new ways of doing things.

  Skill and training is a lifelong commitment. It is no longer a commitment that ends with graduation. The dynamics of a modern industrial society require this training and retraining to be done. We all know that; we have all recognised it. But when we look at the behavioural patterns in Australia over the last couple of decades we see that, rather than employers committing to training schemes to ensure that the skills possessed by their work forces remain up to date with trends in technology and competitive change elsewhere in the economy, they have by and large not done that.

  There are notable exceptions. There are many good employers in this country for whom that remark is not true. They have done it, and they have reaped the benefit of ensuring that their work force is highly skilled, better able to take up new technology, and better able to adapt to change. Those employers have succeeded in winning on behalf of their companies a greater share of the market. The truth is that the great bulk of Australian employers have not done that. They have tended to supplement shortfalls in skill, when they have occurred, by immigration, encouraging people to migrate to Australia and recruiting them off the boat or the plane, supplementing their skill shortfalls in that way.

  Given the cyclical nature of the economy, with its up and down phases, it has always been clear to me that the building industry is a perfect example. When building activities falter with an economic downturn, skilled building workers leave the industry. Given the insecurity they have experienced and the disruption to their lives, it is very hard to attract them back into the industry, although there has been a huge investment in their training. Once bitten, twice shy. Rather than have an ongoing training program, the industry has encouraged migration whenever there has been an upturn, and that has meant that the recovery of the economy has been slowed because there is a temporary gap of skill until the migrants have come into Australia.

  We have locked out from trade qualifications or long-term employment prospects people who, in the downturn, would have been trained as apprentices had the economy been going on at a reasonable rate. Because there were no job opportunities they were not trained, and later their jobs were taken by migrants. This government said that that ought to change, that we ought to become more self-reliant as a nation, that we ought to skill our community, that we ought to make sure that the skills of Australians are updated as we go along.

  While the government recognises that there is a responsibility on it and, through it, on the taxpayer to help fund some of these training schemes, the government also recognises that there is an obligation on employers to make a contribution too. The smart, intelligent employers who make that contribution know that that gives their company a greater degree of flexibility, a greater degree of meeting change and a greater degree of competitiveness.

  But the burden was still that a huge number of employers in this country would not recognise that, had a narrow cost cutting approach to their operations and believed that somehow or other they could pick up skills when they wanted them in the economy. It meant bidding up prices for labour as well and that added to the cyclical nature of upturn, downturn in the cycle. What we said as a government was that there ought to be a levy on employers to spend at least 1 1/2 per cent of their payroll on training—a modest amount compared to what the enlightened employers were doing and a modest amount by international standards—and that the paucity of skills, the run down and the de-skilling of our society, should be turned around and employers should share part of the burden.

  We have been doing that. It met initial hostility and opposition from many employers who opposed it vigorously. In my portfolio, as I move around the country, I do not hear that criticism any more. I hear a number of employers who say to me, `Thank God we were required to face up to our responsibilities, because now that we have come to grips with it we see what you were on about. In fact, we are now spending more than the 1 1/2 per cent that the levy requires in order to keep our work force skills up to date and always relevant to the needs of the market and the technology change that we are using. If this levy did anything, it caused us to focus on training and skilling and devote some attention to that in our corporate plans, and we have reaped the benefit.'

  So the first thing that this levy has done is caused an attitudinal change among employers, and I think that is worth noting. Without it, this training would not have occurred. I have heard the criticism from the opposition that we should get off the back of employers. It does not sound to me, given what the employers are saying, as though we are on their back. It sounds to me as though this has provided a catalyst or the stimulus necessary for an attitudinal change for a modern industrial country. I think that that is true.

  There are some who still run behind the pack, but the figures I have in front of me show that before the training guarantee levy, nearly 60 per cent of all employers in this country with payrolls in excess of $200,000—and a payroll of $200,000 is not a big payroll in Australia—provided no structured training at all. Now, nearly all of those employers over that threshold provide training equal to at least 1.5 per cent of their payroll. So the investment in skilling this nation and lifting its level of skill has been important.

  The issue before this chamber now is whether we should suspend the levy or whether we should abolish it. The opposition's position is to abolish it. I do not think, nor does the government, that the work of the levy has yet been done. There is a case that we recognise and are acting on by virtue of these amendments articulated by the Prime Minister in the Working Nation statement, that since we are asking employers to commit themselves to pick up a number of the unemployed and train them in a much more comprehensive and extensive training program with a training wage negotiated at an attractive level for employers, we should remove this imposition to allow that training wage and the jobs compact approach to work.

  For that reason, we are temporarily suspending this levy. I think that is sensible. We are working here cooperatively with employers and unions to lift the level of employment and the level of skill so that the jobs we create are not painting rocks white or labouring jobs with no future, but are jobs in which people can have a future because they are real and result from skill and understanding of new technology. So we are suspending the levy.

  If we were to remove the levy entirely, after the jobs compact has run its course and before we are able to see the take-up rate of the jobs compact, then the discipline of the training guarantee levy to continue with the encouragement and inducement of employers to commit their salary packages, in part, to training packages also would be removed. That would be wrong, because the attitudinal change is by no means complete. Although significant, it is not through to the keeper yet and we have not yet completed the revolution that is necessary.

  They are the reasons why I will oppose the amendment moved by the opposition that we abolish the levy. That leaves me with the Democrats' suggestion, which is a policy choice open to the government as to whether or not we should abolish the levy on employers and introduce a tax incentive for training. The question involved in this choice is whether employers or taxpayers, on behalf of employers, should make a bigger commitment to training.

  We think it is essential that there be some cost to employers. If it comes without a cost to employers then it will not be valued and the approach will not be utilised properly because employers would not be required to face their own cost structures and work out their commitment to training. Given the huge commitment that the Australian taxpayer is making to the cost of the training and skilling of the Australian work force, it seems to be an inappropriate course of action. The Democrats, who put forward a lot of policy suggestions coming up to the budget and committed themselves to that process zealously, have come up with an overall budgetary package which means an increase in taxation.


Senator Kernot —And where is it spent? Repairing the damage that you people have caused! Do not just talk about raising revenue; talk about where it is spent as well.


Senator COOK —The bottom line is an increase in taxation. I think that is a courageous thing for a political party to do. I do not use the word `courageous' in the way Sir Humphrey Appleby might use it. It is not the government's choice, however, to increase taxation. We think a sharing of the burden and the costs—in this case a sharing by one of the major beneficiaries, the employers of this nation, by meeting the cost in part—is a sensible thing to do. For that reason, we do not accept the recommendation which was respectfully tendered by the Democrats, whose leader interjects on me now in a point-scoring exhibition.

  Nonetheless, with the greatest of respect, we do not accept the Democrats' proposal. We do think it is important that this be a burden that is shared properly and fully and that if at the end of the two years the levy comes back into application then employers should meet their responsibilities. For all of those reasons, I commend the bill to the parliament. I reject the amendment. The government will vote against it. I ask for this bill to have an otherwise unencumbered passage. I hope honourable senators vote accordingly.

  Amendment agreed to.

  Original question, as amended, resolved in the affirmative.

  Bill read a second time, and passed through its remaining stages without amendment or debate.