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Training Guarantee (Administration) Amendment Bill 1991
House: House of Representatives
Portfolio: Employment, Education and Training
The Bill contains four main amendments relating to alternative training schemes, the treatment of partnerships and unincorporated associations, and an exemption for outstanding trainers.
The training guarantee levy came into force on 1 July 1990, and requires employers to contribute a percentage of wage costs, currently 1% and 1.5% from 1 July 1992, to formal training. The requirement was introduced in an attempt to improve the training effort of most Australian employers and to increase the skill levels of the workforce. A survey conducted by the Australian Bureau of Statistics (ABS) in the July-September 1989 period, which dealt with the provision of formal training, found that 22% of employers provided training and that these employers employed approximately 75% of the workforce. The levy was opposed by a number of employer groups and the Opposition, and these groups retain their disagreement with the idea of forcing employers to conduct a certain level of formal training. One aspect of the levy that was criticised was that it is payable regardless of the profitability of the enterprise, so that it must be complied with even if the employer is not making a profit. This has become more relevant since the recent economic decline.
The effect of the levy is uncertain at the moment as there are no figures available from the ABS to follow on from their previous survey. The next figures are expected to be available in May. However, there have been various reports of surveys conducted by other groups. The second reading speech states that a survey by the Australian Chamber of Commerce and the State Bank in NSW, indicates that 45% of employers had increased their training spending in the September 1990 quarter. On 10 April 1991, the Sydney Morning Herald carried a report on a survey of 400 members of the NSW Chamber of Commerce which found that less than half had contributed the required 1% of payroll to training.
While the effect of the levy may not yet be clear, it has been clear that the initial operation of the scheme has not been without difficulties. One of the major problems was the failure to have guidelines for Registered Industry Training Agents (RITAs) in place until December 1990. The role of RITAs is to approve training expenditure as eligible under the scheme, and in their absence the prospect arose that funds spent on training may be ruled ineligible at the end of the year by the Tax Office, which has responsibility for potential tax liability under the scheme. The passage of the guidelines followed much disagreement between the Government, Opposition and the Australian Democrats, and were finally passed, with Opposition support, after certain changes from the Government. One of these involved the fees that may be charged by RITAs. It was argued that the current flat fee structure was inappropriate, as was the inability to charge fees where a training scheme was rejected as ineligible under the scheme. These matters will be addressed by this Bill.
Another difficulty arose for those firms that had a good training record and were already exceeding the schemes requirements. Such employers were penalised by the scheme as they had to bear the administrative costs associated with compliance with the scheme. In the March 1991 statement `Building a Competitive Australia', the Prime Minister announced that to promote excellence in training, enterprises that spend more than 5% of their payroll on training would be exempted from the administrative requirements of the training guarantee scheme. There was no indication of how many employers would be effected by this change.
Other difficulties have arisen in the application of the levy to bodies that are not separate legal entities, i.e. unincorporated associations and partnerships, where the liability for the levy is personal rather than the function of the employing company. The Bill will clarify the operation of the levy in respect to such bodies.
A new section 4A will be inserted into the Training Guarantee (Administration) Act 1990 (the Principal Act) by clause 4 and will provide that people covered by recognised alternative training schemes will be excluded from the definition of employee, and therefore the scheme. The Minister may make regulations that will determine if the person is covered by a recognised alternative training scheme.
The treatment of partnerships is dealt with in proposed section 11A, which will be inserted into the Principal Act by clause 5. Each member of a partnership will be personally liable for any liability to pay tax due to an underspending of the levy.
Unincorporated associations are dealt with in proposed section 11B. Any liability arising under the Principal Act will be imposed on all the members of the association, with each liable for any shortfalls. Similarly, all members of the association will be liable for an offence committed by the association, although it will be a defence if the person can prove that they did not aid or abet the action or omission that led to the offence and was not knowingly concerned with the relevant act or omission. Obligations imposed under the Principal Act will be imposed on the controlling officers of the association (i.e. those who have control over the conduct of the association).
Section 12 of the Principal Act provides that members of a business group may elect that they be treated as a single employer for the purposes of the Principal Act. Clause 12 will amend this section to clarify the liability where such an election is made. The amendment is similar to that in relation to unincorporated associations, with each member liable for any amounts payable and for offences, with the same defence as described above available.
The exemption for outstanding trainers is contained in proposed section 18A, which will be inserted into the Principal Act by clause 8. The Minister will be able to make regulations that will exempt such employees if they have been an outstanding trainer for that year or a three year period that includes the year. Outstanding trainer is not defined in the Bill, and will be defined by regulation.
Section 43 of the Principal Act will be amended by clause 12 to provide that RITAs may charge fees for applications. Clause 13 will amend section 44 to allow the training advisory body to charge fees for applications.
Section 102 of the Principal Act will be amended to provide that regulations may be made setting a maximum fee of $500 for the issue of a training advisory certificate (clause 17).
Bills Digest Service
Parliamentary Research Service
For further information, if required, contact the Education and Welfare Group on 06 2772410.
This Digest does not have any official legal status. Other sources should be consulted to determine the subsequent official status of the Bill.
Commonwealth of Australia 1991
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Published by the Department of the Parliamentary Library, 1991.