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One of my hobbies is collecting examples of how government policies, usually achieve the opposite, to their possibly good intentions. The training tax is yet another example.

Despite the enormously increased expenditure of tax payer’s money on so many government identified targets, from the 1960s to the 1980s the problems of these particular target populations became worse. One area is welfare, where it is now becoming obvious that the politician’s idea of helping the poor to become helpless, is no act of kindness.

Another area is Aboriginal people, where the Government decided to spend more money in order to elevate the Aboriginal people into a special class with special privileges, this is creating so many new problems and breeding a new wave of resentment. Another area is crime control, where governments are building bigger prisons and bigger police stations to cater for this new expanded market.

And the latest one is the training tax, which is specifically designed to shift the responsibility for training away from the individuals concerned, and loading it onto the employers. Everyone concerned with these issues should think them through, seeking new solutions. If the problems have been caused by bad policies, doesn’t it make sense to reverse these policies rather than burden us with yet another layer or rubbish.

Minister John Dawkins in promoting this legislation seems to lay the whole blame for this alleged inadequate skill formation, on the stupidity of some enterprise management in not investing sufficiently in structured training. Despite the huge range of differences in training requirements from one industry to another, and of different occupations within one industry, the Government is simply assuming that structured training is the answer for all.

The absolute nonsense spoken by proponents of this scheme, namely Minister Dawkins when he says that: “an Australian Bureau of Statistics survey of training in 1989…indicated that 60 per cent of businesses surveyed spent nothing on training.”

I agree that this would be a remarkable state of affairs if it were true. But it is not true. The ABS survey covered one quarter of 1989 and a sample of 2,000 employers, of whom 58 per cent reported no expenditure in that quarter on structured training.

Bear in mind that the training tax legislation has a tightly defined distinction between structured training and all other forms of training, and as Barry Maley of the Centre for Independent Studies has pointed out — non-structured methods of training predominate throughout industry. It is therefore obvious that Mr Dawkins’ statement is extremely misleading.

Resources are scarce

Resources are scarce, and employers are now forced to use some of these scarce resources to keep new records of training expenses for the purpose of meeting a possible tax department audit. This is another example of the way in which Governments set out with supposedly good intentions but the result is simply to create unnecessary costs and counterproductive drag on the economy.

Who else is in favor of the legislation?

It has appealed to a whole range of educational institutions and accounting firms, who have in a sense, been granted semi-exclusive franchises for what they see as a potential growth area. This has fired them with zeal to provide a service that may not be the right medicine for the illusory disease.

Why be skeptical?

Many successful employers are asking themselves why they should be forced to tamper with success? John Maguire, Managing Director of Driza-Bone, one of Australia’s success stories in clothing export, has a most effective staff training system that does not meet the structured requirement and he is not going to risk modifying his winning formula simply to satisfy the bureaucracy.

The Australian public service has been promoting training rorts on an open-slather basis for some time so I am fearful of the results of this new legislative encouragement in their hands. An example is that the Department of Social Security spent $73 million to train almost half its staff during 1990 -91 and spent more than $2 million on staff travel allowances. It is obvious that the public service is already misusing this training focus to grant fringe benefit rackets to their ever increasing numbers. Much of this is little more than subsidised recreational breaks and tax free travel allowances. Australian has too much of this already and now they have enshrined in legislation even more of the same.

The result

Before the training tax legislation the courses offered by the educators had to be good, and if their content was at a level where it appealed to employers and attendees, the course would be well attended, further refined and presented again next year (eg. the Kalgoorlie School of Mines Mill Operators course at the Kalgoorlie School of Mines, which has, on its own merit, been run on 16 occasions).

Now, as a result of the training tax, I receive a mountain of junk mail across my desk, promoting structured training courses, purporting to be good only because it is structured and suggesting that anything is better than paying tax. In that sense the intention may have been to train the workforce, but the result has been to decrease the average quality of the courses available.

The solutions
1. Responsibility: Put the onus of education and training right back where it belongs — on the individual and the parents. On those responsible for self-improvement. Almost everyone I speak to are trained and educated in their different fields because of some conscious decision to exercise some responsibility for their own lives. How many of you received your qualifications just because someone was forced to burn up a few dollars? The responsibility for you to be effective is yours, not your employers, not the government’s. It is your responsibility and we are kidding ourselves if we tell the next generation that they are someone else’s responsibility.

2. Competition

3. Quality: Sweden, the country that invented the training tax is swinging away from it as they are now seeing it to be a mistake. They see it attacking the symptom not the cause of low training; the aim should be to create competitive markets. If companies have to compete they will recognise that human capital gives them a competitive advantage. They will then focus on how to give training a priority at the enterprise level and design their operations to maximise their human capital. Training-taxes will never do that. We need to improve the quality and the relevance of courses for youth and adult retraining. The courses should be designed to hit the target and not to comply with some bureaucratic nonsense.


If I’m saying that this training tax is unwelcome as it diverts management attention away from clearly defined goals, then why am I spending time thinking about it and discussing it? If you see a problem adversely affecting your business, it is your responsibility to deal with it. Likewise, there is a training responsibility, but the responsibility for job training is not a responsibility that should be off loaded on to governments or employers. It is far too personal for that.

Investment in one’s career on a personal level, may win no votes for politicians at election time, but it is more effective if kept out of the hands of the politicians. Investment in one’s career involves commitment, ambition, system and awareness of prerequisites and alternatives. Such investment has a pay-off also to the community, by making the person “investing in himself” more productive. Employers can play a part by enthusiastically encouraging and rewarding people if they are striving for self-improvement, continued education and further qualifications. Employers can voluntarily provide facilities and staff within practical limits where appropriate, but not on a compulsory basis.

For us to regard the responsibility of educating the population as being either the Government’s or employer’s, is to side- step our individual responsibility in this, far too vital a matter.

Example of the absurdity of the training tax at work

In time for the 1993 Kalgoorlie Centenary Celebrations, our company costed an extensive refurbishing to the exterior of our three storey Kalgoorlie office (the historic home of the “Kalgoorlie Road Board”). From this council letter, it can be seen that this productive action would attract a fine as a penalty. This penalty applies to all building and construction work. The only way to avoid the fine is to cancel our refurbishment program, which we have done. Do disincentives of this nature make sense at a time of high unemployment? Would they ever make sense?



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