Universities Australia today released the results of a KPMG study that shows implementation of the recommendations of the Review of Australian Higher Education (the "Bradley Review") will drive Australian recovery and growth, and provide increases in future skills, productivity, exports and GDP.
"The Government has committed itself to many of the structural recommendations in the Bradley report. It should now also accept the Bradley recommendations on funding because of the great benefits available for Australia's economy and society," said Dr Glenn Withers, Chief Executive of Universities Australia.
The KPMG Report, commissioned by Universities Australia, indicates that real GDP would increase by an average of $1.6 billion annually over the next decade, then accelerate to an average $38 billion more annually in the 2020's and $96 billion more in the 2030's as the full benefits flow through.
The report estimates the return on investment in higher education, putting all costs and benefits together, as representing a real economic rate of return of 14-15%, which is over double the benchmark set for good investment at the long-term bond rate of 6-7%.
The gains would accrue half from the high labour productivity of graduates, and half from a larger labour force and enhanced research and innovation coming from Australia's universities, according to the report.
To achieve as much as an extra $138 billion in real GDP annually by 2040 would require the reform package and outlay of the $6.5 billion over four years, recommended by the Bradley Review in the first instance, then government spending would need to move progressively to the OECD average of 1% of GDP after that. The Study shows Australia has fallen well behind OECD public funding norms.
"Funding higher education reforms is how we can pay for the pensions, health care, environmental improvements and the defence budget of the future. Australia's universities call upon the Parliament to seize this opportunity without further delay," Dr Withers said.
The Study uses the respected KPMG Econtech models of the Australian economy, and shows that any net upfront burden is modest and the downstream payoff is unusually large, as also confirmed by a range of complementary evidence.
"For a sector that represents 1.6% of the economy, to grow living standards by over 5% is no mean feat, and unlike most expenditures under consideration by Government, including tax cuts, strong up-front stimulus can be accompanied by medium and long-term benefits to government and society, which fully meet the Golden Rules of fiscal responsibility," Dr Withers said.
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