The need for Australians to work longer and smarter in order to maintain the standard of living of an ageing population is a significant challenge facing government.
A shrinking proportion of Australians of working age and a better educated global population means that if Australia hopes to remain internationally competitive it must try harder to maximise its human capital and boost productivity through greater workforce participation.
A key to achieving this over the longer term is improving educational outcomes, particularly among our youngest and most disadvantaged.
The Federal Government’s recent Intergenerational Report stresses that the proportion of Australians younger than 65 has been shrinking over the past 40 years and will continue to do so dramatically over the next 40.
A key point of the report is that “continued efforts to encourage higher participation across the community would have widespread benefits for Australia’s economy and society”.
“Higher workforce participation can reduce the fiscal pressures associated with providing welfare support and serve social inclusion and equity goals,” the report says.
This is echoed in this week’s CEDA report - Addressing Entrenched Disadvantage in Australia – which identifies a raft of policy solutions to move people out of disadvantage, with a particular focus on initiatives around education, Indigenous Australians and mental illness.
CEDA warns that entrenched disadvantage impacts all aspects of society.
“While for individuals the ramifications can be severe, there are much broader societal and economic consequences, including the impact on government budgets and lower workforce participation leading to lost growth potential for the country as a whole,” CEDA says.
A key factor in reducing life-long disadvantage is maximising the educational outcomes for children from an early age through an early intervention approach, such as The Smith Family’s Learning for Life scholarship program, which is showcased in CEDA’s report.
Learning for Life supports children and young people from low-income families to achieve educationally, and transition to post-school employment or further education.
The program has three integrated components that support improved educational outcomes:
The CEDA report emphasises that educational attainment is an important predictor of an individual’s future employment, health and welfare prospects.
Young people who do not complete Year 12 are at risk of a lifetime of economic and social disadvantage.
Conversely, there is a positive correlation between increased individual learning and a reduction in the risk of future unemployment and long-term disadvantage.
Given the relationship between education and later outcomes, improving the educational outcomes of disadvantaged children and young people is the most cost-effective approach to breaking the cycle of long-term disadvantage and welfare dependency.
Investment in this area is far more efficient than later outlays on income support and remediation efforts targeted at building the skills of adults unable to secure employment or participate in society more broadly.
In 2010, KPMG estimated that if the Year 12 completion rate increased 5.8 per cent by 2015, the economic contribution would be a 0.4 per cent gain in gross domestic product by 2024. If we take a longer horizon to 2040, the estimate is 0.9 per cent. This equates to an additional $11.3 billion (on 2008/9 prices) annually in the economy.
The upcoming Federal Budget provides the Abbott Government with an opportunity to boost funding for early intervention programs.
These approaches aim to mitigate factors that place children at risk of poor outcomes or prevent an emerging problem from getting worse. From both an economic and social policy perspective, they are prudent investments.
The Learning for Life program is seeing improvements in school attendance, Year 12 completion and post-school engagement in employment or further education for highly disadvantaged young people.
For example, in 93 per cent of primary schools where The Smith Family works, the average attendance rate of Learning for Life students is the same or better than their peers. This is despite the fact that Learning for Life students are more disadvantaged than their peers.
Eighty per cent of Learning for Life students are in employment or education, 12 months after they leave the program, with the vast majority of the other 20 per cent actively looking for work and/or engaged in volunteering.
Early intervention education programs offer considerable promise for a cost-effective approach to both prevent entrenched disadvantage and boost Australia’s future productivity and standard of living.
Read more on CEDA's research Addressing entrenched disadvantage in Australia, including a chapter from The Smith Family Head of Research and Advocacy, Anne Hampshire.