Bills Digest 79 1995-96
Education and Training Legislation Amendment Bill 1996
WARNING:
This Digest is prepared for debate. It reflects the legislation as introduced
and does not canvass subsequent amendments.
This Digest was available from 17 May 1996 1996
CONTENTS
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.
However, as part of the Working Nation strategy, the former government
decided to suspend the TGL for 1994-95 and 1995-96, so the proportion for
those years was not officially struck. Any shortfall for 1993-94 could be
made up by providing eligible training during the two years of suspension.
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.
Comment: Section 15D was inserted in the Training Guarantee
(Administration) Act 1990 by the Training Guarantee (Administration)
Amendment Act 1994 and deals with how a training guarantee shortfall
(the difference between the minimum training requirement and the net eligible
training expenditure of an employer) which is postponed is set off against
excesses (net eligible training expenditure minus the minimum training
requirement) in the following years. Section 42A requires employers who
postpone a training guarantee shortfall lodge a further statement for
the year following the shortfall.
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.
Comment: Part 6 of the Training Guarantee (Administration)
Act 1990 deals with training guarantee statements and assessments.
Division 3 deals with assessment arrangements for training guarantee charge.
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.
Comment: Parts 8 and 9 of the Training Guarantee
(Administration) Act 1990 deal with the collection and recovery of
the training guarantee levy and penalties.
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.
Comment: As noted in the Second Reading Speech to this Bill,
the amendment corrects a drafting oversight in the Higher Education
Funding Amendment Act (No. 2) 1995 which would have resulted in the
Minister being unable to make determinations approving grants to open
learning organisations for the years 1996, 1997 and 1998.
The Open Learning Initiative was announced in the 1992-93 Budget
and provides access to higher education for those otherwise excluded from
on-campus study by, for example, work or family responsibilities.
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.
Comment: The majority of Commonwealth funding for schools is
provided on a calender year basis under the States Grants (Primary
and Secondary Education Assistance) Act 1992. Funds are provided for
both recurrent expenditure and capital projects, as well as for a range
of specific purpose payments. The Schedules to the States Grants (Primary
and Secondary Education Assistance) Act 1992 set final and initial
grant levels. Grant levels incorporate cost supplementation for price
increases.
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.
This page was prepared by the Parliamentary Library, Commonwealth of
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Last updated: 17 May 1996
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