A Greater Australia: Population, policies and governance - CEDA

Section 3.3case, funding also could be offered to international experts in their fields thereby providinghigh quality teaching as well as offering knowledge exchange opportunities toAustralian faculty members.The current system of tax deductibility for self education expenses could benefit fromreform. Currently it offers no assistance should an employed individual wish to developskills in another industry or profession. Moreover, it is an open ended deduction sothat attendance at an overseas venue can attract a greater deduction than that atan Australian venue, even though the learning experience could be identical: governmentshould consider capping the benefit by providing it as a tax offset rather than adeduction.A role for industry to promote productivityAt the industry level, contributions to increased productivity will arise from such thingsas the ability of a firm to adopt and adapt to new technology and achieve economiesof scale and scope and offer training opportunities to its workforce.For the reasons spelled out earlier – no slavery and insecure intellectual property rights,–firms may underinvest in on-the-job training; and employees underinvest in their owneducation and training. Therefore, there is a case for public assistance.There is no obvious answer to the question of how much training a firm should provide;and how the cost burden should be shared among individuals, firms and government.However, firms could (particularly through their respective industry bodies) work withuniversities and other VET organisations and partially fund, or provide endowments tothose institutions that are willing to offer courses relevant to that industry.A note of cautionEconomy wide reforms aimed at increasing productivity will inevitably have unintendedconsequences on particular sectors of the economy. For example, productivity growthis both positively and negatively correlated with unemployment in the long run. This isbecause gross job creation in the economy is comprised of a significant proportionof job destruction in any given period. As such, low substitutability across sectorsmay result in a reversal, within those sectors, of the creative destruction effect in theaggregate labour market.ConclusionEducation and training play an important role in improving Australia’s productivity performance.While that role is likely to be subservient to the role played by institutionaland policy reform in improving productivity, the economic and fiscal consequences ofAustralia’s ageing population strongly infer that governments in Australia should have aproductivity focus with the provision of education and training. The available Australianestimate suggests that an additional year of higher education could increase productivitysignificantly.Governments could benefit from adopting more flexible policies.When the economy is growing at a sustainable rate and structural unemployment islow, then the cost of education, in terms of wages foregone, is high and therefore skillsA Greater Australia: Population, Policies and Governance158