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This Digest was available from 17 May 1996 1996
Date introduced:9 May 1996
House: House of Representatives
Portfolio: Employment, Education and Training
Commencement: 1 July 1996.
The major effect of the Bill is to abolish the Training Guarantee Scheme. The Bill also provides an additional $20.706 million in capital grants for non-government schools in 1996-97.
The Training Guarantee Levy (TGL) was introduced in order to raise the training-of-staff efforts of Australian enterprises, in both the private sector and the public sector.
Some sectors in the Australian economy had become concerned that the skills base had been eroding, leaving Australia firms increasing less able to compete, both in international markets and domestically. Surveys conducted by the Australian Bureau of Statistics (ABS) had shown that many firms did not undertake any staff training at all, and many more provided only minimal training (although the average amounts overall were above the designated proportions as outlined below). In the absence of any substantive commitments by employers to increase their levels of training, and with apparently widespread concern that trained staff were being 'poached' by firms not prepared to invest in training their own existing staff, the Commonwealth government felt obliged to change the 'culture' of industry training, especially to encourage employers to regard training as an investment rather than a cost. It introduced what became known as the National Training Reform Agenda, of which the TGL was a component.
Operation
The TGL scheme operated under the Training Guarantee Act 1990 and the Training Guarantee (Administration) Act 1990, with effect from 1 July 1990.
In order to meet the requirements of the legislation employers were obliged to spend an amount equivalent to a proportion of their annual total payroll (if above the threshold) on eligible staff training each year. The designated proportions were:
1990-91 1.0 %, if above $200 000.00
1991-92 1.0 %, if above $214 000.00
1992-93 1.5 %, if above $222 000.00
1993-94 1.5 %, if above $226 000.00.
Eligible training included in-house courses such as on-the-job training, office skills and computer training courses, external programs such as off-the-job apprenticeship training and conferences and seminars directly related to the employer's business activities, and contributions to training institutions such as TAFE colleges.
In order to assist enterprises in arranging their training programs so that they were suitably structured to meet their own needs and the requirements of the legislation, the scheme provided for Registered Industry Training Agents (RITAs) from 1 January 1991. RITAs were supervised by the National Training Board and were also empowered to issue Training Advisory Certificates to employers who were in doubt about the eligibility of their training.
Firms which did not meet the TGL requirement were obliged to pay the shortfall, between the amount determined as above and their actual expenditure on eligible training, to the Australian Taxation Office (ATO). Self-assessment (subject to audit) applied and employers needed to submit returns to the ATO only if they were reporting a shortfall. The monies collected by the ATO were to be distributed to State and Territory training authorities, to be used for training activities and enhancement, after ATO administrative expenses had been deducted. It was reliably expected that the ATO would collect somewhere in the range of $10-50 million in the initial years of the TGL, although some estimates went as high as $800 million. Monies actually collected (payable by 30 September following the end of each financial year) were much lower than any original estimate, as follows:
1990-91 $3.2 m.
1991-92 $1.5 m.
1992-93 $2.3 m.
The monies recovered by the ATO barely covered, or did not cover, the costs of administering the scheme. Of course, there were also significant compliance costs borne by employers in keeping detailed records, unless they had achieved 'outstanding trainer' status (having spent 5% or more of their payrolls on training), in which case they were exempt from the requirement to maintain records for the following three years. (Very few firms ever achieved this status.)
Outcomes
Surveys conducted after the TGL had been implemented showed that the training effort undertaken by enterprises which became subject to the TGL increased substantially throughout the country.
There was some debate during the currency of the scheme that firms were looking for ways to spend money just to avoid paying the TGL, and that much of this expenditure was wasted on 'artificial' or 'fake' training programs. It appears that many firms did undertake training programs simply or mainly to meet legislative requirements initially. It is more likely that some external providers conducted courses, etc. which barely met the eligibility criteria, or did not meet them at all, for unsuspecting firms and employees.
There is so far no reliable evidence gathered since the TGL was suspended to indicate whether the training effort of enterprises has changed significantly.
Schedule 1 Amendments
The Training Guarantee Act 1990 is repealed by item 1 and the Training Guarantee (Administration) Act 1990 by item 2.
Item 3 provides that where an employer is liable to pay the training guarantee levy for the year commencing 1 July 1993 under paragraphs 15D(3)(f), (4)(b) or (6)(b) of the Training Guarantee (Administration) Act 1990, section 42A will continue to apply.
Item 4 provides for the continued application of Division 3 of Part 6 of the Training Guarantee (Administration) Act 1990 in relation to any amount of training guarantee charge that remains or becomes payable by an employer on or after 30 June 1996.
Item 5 provides for the continued application of Parts 8 and 9 of the Training Guarantee (Administration) Act 1990 in relation to any amount of the training guarantee levy that remains or becomes payable by an employer on or after 30 June 1996.
Schedule 2 Amendments
The amendment to section 22A(3) of the Higher Education Funding Act 1988 proposed by item 1 of Schedule 2 will enable the Minister to make determinations approving grants to open learning organisations for the years 1995, 1996, 1997 and 1998.
The effect of item 2, which amends Schedule 3 (Column 2) of the States Grants (Primary and Secondary Education Assistance) Act 1992, is to provide an additional $20.706 million in capital grants for non-government schools in 1996-97.
Ian Ireland Ph. 06 277 2438
Geoff Winter Ph. 06 277 2437
17 May 1996
Bills Digest Service
Parliamentary Research Service
This Digest does not have any official legal status. Other sources should be consulted to determine whether the Bill has been enacted and, if so, whether the subsequent Act reflects further amendments.
PRS staff are available to discuss the paper's contents with Senators and Members and their staff but not with members of the public.
ISSN 1323-9032
© Commonwealth of Australia 1996
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Published by the Department of the Parliamentary Library, 1996.
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Last updated: 17 May 1996