First published in The Australian, 25 July 2013
LIFELONG learning is a worthy aspiration for all of us, a cornerstone principle of modern society providing the knowledge, creativity and responsiveness necessary to adapt to a rapidly changing global market place.
The Rudd government’s plan to impose a $2000 cap on both professional and vocational learning deductions has rightly drawn sharp criticism from a broad cross section of professional and industry bodies.
For a returning prime minister who says "our national objective must be to build the best educated, best trained, best skilled workforce anywhere in the world", the cap is a misjudgement, a misstep.
And with all the focus on fringe benefits tax on cars it might just slip through.
While former treasurer Wayne Swan pitched the plan to tax deductions for self-education expenses squarely at those in the medical profession, the pervasive nature of the proposal is far more widespread than he let on. And the economic impacts have not been fully thought through. A modest annual saving of $500 million now is false economy when you add up the cumulative economic cost of Australians choosing to limit their pursuit of higher work-related qualifications, whether at the vocational or professional level.
Let’s consider the impact. First, it will impact individuals. A $2000 non-indexed cap will discourage individuals from pursuing certain training, continuing skills and knowledge development.
Second, it will impact those businesses that provide skills and knowledge training, reducing their revenues and profits, putting pressure on budgets and on job security.
Third, there will be a broader negative impact on the economy as we lose market share to other countries and markets that place a higher value and recognition on ongoing learning and development of skills.
The importance of education is critical to the ongoing competitiveness of countries in the global economy.
This is an unequivocal finding of the book, Australia’s Competitiveness: From Lucky Country to Competitive Country, commissioned by CPA Australia, which surveyed over 6000 business leaders and decision-makers in Australia and overseas.
Similarly, the Australian Workforce Productivity Agency has warned that industry demand for those with higher education qualifications is set to soar with growth rates of between 3 per cent and 4 per cent every year to 2025.
The proposed cap puts at risk the ability to fill this demand for a skilled labour force.
The AWPA found that every extra dollar invested in tertiary education expanded the economy by about $26 and tax revenues by $8 because people are able to earn more, spend more and pay more tax.
It appears the Rudd government, in its hasty search for revenue, has seen this area as a soft target to help provide the funding necessary for its school education reforms.
Those of us familiar with the current $50 million advertising campaign promoting the benefits of these reforms know that this money, taken from ongoing training, is better spent on providing teachers with training.
Faulty logic is at play here. The government’s own ads are highlighting the shortcomings of its policy to restrict access to self-education.
Kevin Rudd has acknowledged that "the China resources boom is over".
If we are to carve out a place for our country in the Asian Century, we must redouble our efforts to become a clever country, to transition to a knowledge based economy, to be competitive with any country in the world and secure the high-paying jobs of the future for our children.
Let’s be smart and drop the cap and get working to ensure the Asian Century is actually the Australasian Century.
Alex Malley is chief executive of CPA Australia.