Jacob Greber at The AFR has reported today on a new KPMG report, which calls on the federal government to boost funding for education and infrastructure in order to raise productivity and living standards:
KPMG… forecasts another $25 billion budget blowout if productivity growth continues to languish.
Warning that the current global economy may “be as good as it gets”, the financial services firm argues that a wave of digital disruption, the ageing population, widening inequality, a plateau in education standards, and the “hollowing out” of middle class wages are a recipe for fractured societies.
“A breakdown in social cohesion can be averted only if governments are willing to invest in high-quality education and training to equip as much of the workforce as possible with the skills demanded in the digital age,” the firm states in the report…
“Whichever party forms the next federal government after July 2 must confront the challenge of weak productivity growth head-on if Australia’s quarter century of recession-free growth is to be extended,” said John Somerville, a KPMG national managing partner.
This will include boosting labour productivity by improving the education standards of disadvantaged students, he said, echoing the basis of the education plan laid out by businessman David Gonski.
Even a minor deterioration in productivity growth over the next few years will have a major impact on national income, modelling by KPMG shows.
Surely this is another ‘feather in the cap’ of Labor’s policy to spend an additional $37.4 billion on schools funding over the coming decade to boost the future productivity of the workforce, versus the Turnbull Government’s $48.2 billion policy to cut the company tax rate from 30% to 25% over a decade.
Whereas the Coalition’s company tax cut would primarily benefit foreign owners/shareholders, in turn reducing national income:
Labor’s plan to raise education spending would benefit the domestic population. The money would be spent here and would not leak offshore, which comes on top of the greater long-run benefits from increased productivity.
In short, Labor’s education boost wins hands down over the Coalition’s giveaway to foreign owners/shareholders.
