Image by AditChandra via Flickr

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

Business owners are often scared of training. There’s a feeling that once you’ve spent money giving people the skills they need to run your business, they’ll use their new-found expertise to find a better job elsewhere.

Maybe, but if you spend money wisely giving your people the right skills your investment will pay off quickly.

Take a trivial example: Microsoft Word.

Many knowledge workers spend a large part of their working day dealing with Word – often without ever mastering the software. A one-day training course will be enough to teach most people everything they need to know about the program.

Typically a one-day out-of-office course will set you back between $250 and $500 per person depending on various factors. You’ll also lose the person’s labour for a day.

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

So the investment you make training your employee to be more effective with Microsoft Word will return 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 employee will be able to produce higher quality documents, which will reflect better on your company.

Perhaps the most important pay off is in employee motivation. Many workers like to acquire skills; it boosts their self-esteem and shows them that you feel they are worth investing in.

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