Investing in higher education would boost the Australian economy more than tax cuts or pouring government money into industry. That’s the verdict of a KPMG report commissioned by Australia’s universities, who, let’s face it, stand to gain the most from an investment in higher education.

The numbers look good. According to the report Australia’s average annual GDP could climb by an extra A$1.6 billion over the next ten years. Reaching an annual average of A$38 billion by the 2020s.

Those benefits depend on Australia’s federal government following the recommendations made in a higher education review (The Bradley Review). Bradley recommended spending A$6.5 billion on higher education over four years, then spending the OECD average of one percent of GDP in each following year.

KPMG says while the cost is modest, the pay-off would be unusually large.

Last week’s Australian federal government budget spending commitment to higher education fell well short of the amount recommended.

See:

New report shows university reforms will drive growth

Training scares many bosses. They worry if they spend money training workers, they'll take their new skill to find a better job elsewhere.

Maybe, but if you spend money wisely giving workers the right skills a training investment pays off quickly.

Take a trivial example: Microsoft Word.

Many knowledge workers spend a lot of time with Word – without mastering the software. A one-day training course will teach most workers everything they need to know about the program.

Typically a one-day out-of-office course costs between $250 and $500 per person. You'll also lose the person's labour for a day.

The average Australian worker earns around A$27 an hour. In New Zealand the average hourly wage is around NZ$25. Knowledge workers will earn more.

So the investment making employees more effective with Microsoft Word returns a dividend once you've saved 10 hours.

You can realistically reckon on reaching that point in two months. Probably less. What's more, your employees will  produce higher quality documents, which will reflect better on your company.

Perhaps the most important pay off is in motivation. Workers like learning skills; it boosts their self-esteem and shows them you feel they are worth investing in.

There's another reason to spend money training your staff: The Hawthorne effect.