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
Date introduced:9 May 1996
House: House of Representatives
Portfolio: Employment, Education and
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
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.
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.)
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
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
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
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
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
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
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
PRS staff are available to discuss the paper's contents
with Senators and Members and their staff but not with members of
© Commonwealth of Australia 1996
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Last updated: 17 May 1996
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