Investing in ourselves

Governments everywhere talk about the importance of investing more in people. They want us to know what they are doing, what they have achieved, and what they intend to do.

We are expected to be well qualified and highly skilled in what we do, keeping pace with a rapidly changing world at the same time. In return we are supposed to get better jobs, earn more, work smarter, and contribute to a healthier economy.

Many of us who are parents want our children to do well at school so they too can enjoy these benefits.

There is no doubt Australians are becoming better educated and more productive. Over the past decade, the proportion of people with a vocational or higher education qualification rose 10 per cent. Australia's productivity rate has increased by an average of 3 per cent a year from the late '90s to today. Our governments spent just over 14 per cent of total public expenditure on education, which is above the OECD country mean.

But there is a need to do more to encourage Australians to keep investing in education and training. This may be difficult when the financial returns for doing so might not be that encouraging. Australia is well below the OECD average in regards to relative earnings.

In the lead-up to the 2007 federal election we are hearing about Labor's education revolution where investing in Australians is the heart of productivity growth and competitiveness.

The Liberals believe choice in education and training is the answer.

Regardless of how many policies, programs and initiatives are pumped out by governments, many of us do not have the time, finances or support from our families and employers to keep investing in ourselves.

When we want to, we may not find exactly what we need. If fact, we may not be interested at all. This doesn't mean we haven't learnt or strove to do better - it is probably the opposite.

Do governments know what sort of labour force they will need in future? Do they know where the skills are needed? Do they know what programs actually work in providing skills? How do they prioritise investment in people? How do they reinvest the returns they get from their investments?

Governments must consider these issues before they decide how it will invest more in its people. They need to rethink investment in a way that engages people and reduces barriers to participation. Governments must track the programs' impact to make sure they meet the changing needs of people.

Governments face three challenges in making this happen.

We need to think more about how we manage the investment in our people by focusing on the values underlying policies and actions.

We need to engage our best business, community and political leaders and thinkers in a dialogue to find and implement solutions to the challenge of investing in people facing the future of Australian society and Queensland.

We need to address the static workforce and growing numbers of people on pensions and benefits.

The ABS (2006) estimates that children born in 2004 will live two to three years longer than those born 10 years earlier. In fact, the life expectancy of Australians is the fifth highest of all OECD members.

As per the Intergenerational Report 2006, we need to build capacity through mentoring and support of a new workforce of emerging policy-makers and academics to develop skills and public policy understanding.

However, we're not sure this last point will be universally seen as an answer to the presumed skills crisis, except by the relatively few people who may stand to benefit.

It might be useful to draw an analogy with carbon trading credits. The comparison goes something like this:

• Carbon: Everyone agrees we can't continue pumping carbon into the atmosphere, therefore the external costs of carbon must be sheeted home to the users.
• Training: Everyone agrees our workforce is failing to acquire and reacquire the skills they need, therefore the external benefits of training must be recognised and sheeted home to the beneficiaries.
   
• Carbon: Carbon trading scheme established wherein every business has entitlement from the government to X amount of carbon credits per year or tax paid on excess carbon produced.
• Training: Tax rebate of $X per year entitlement established for every worker, offset by training levy of same $X per year per worker on all firms.
   
• Carbon: Firms that need more credits have to buy them in the carbon trading market; firms that don't need as many can sell theirs to those who need them.
• Training: Firms can offset their levy by either spending to train their workers and/or by hiring workers who have already spent their own training credit that year.
   
• Carbon: As the price of carbon credits rises, firms make changes to their production processes to produce less carbon.
• Training: Workers who use their training credits to get training become competitive in the market for jobs because they can bring a financial benefit to a firm hiring them. Workers seek out firms which will provide training because they can get an extra rebate for the training spent on them that year by the firm.

We are not sure how the sums work out for Treasury (probably pretty expensive, but hey, one way or another more money needs to be spent on training overall).

The point we want to make is that just as there appears to be a public benefit from creating a market mechanism to achieve a public good (or in the case of carbon, reduce a public harm), then there may be benefit in seeing whether or not we might be able to create a market mechanism to invest more in skills and reward training.

What the model above attempts to do is to create a favourable market for workers with training as opposed to workers without it. The time to receive and give training is currently a problem for workers and employers. This approach will go some way towards creating a favourable mindset on the part of workers and employers for spending some time and money on training every worker every year.

We appreciate of course that training is a most imperfect surrogate for the acquisition of wisdom, but to date the accurate measurement of wisdom has eluded us.