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SECTION 6: ECONOMIC BENEFITS
There are multiple benefits to Aboriginal and Torres Strait Islander and all Australians from increasing Aboriginal and Torres Strait Islander people’s higher education participation and employment. These include direct benefits for individuals and communities, as well as broader economic and social benefits for all Australians (Australian Government 2013: 11). Achieving these economic benefits requires a coordinated combination of resource allocations, reallocations and targeted investments in key areas.
Aboriginal and Torres Strait Islander people are over-represented in the VET system (5.4%) on a population basis (3.0%), and concentrated in low-level Certificate levels. Investing in Aboriginal and Torres Strait Islander Training Packages in intermediate labour market program - such as bridging and enabling courses, in higher level VET nursing entry level courses and in Aboriginal and Torres Strait Islander national health organisations to drive progress is recommended as part of a government coordinated approach to Aboriginal and Torres Strait Islander health training.
The following is an example of redirecting government expenditure from public order and safety to tertiary education.
Example 1: Redirecting government expenditure
Government expenditure on public order and safety is more than five times higher on the Aboriginal and Torres Strait Islander compared with non-Indigenous population on a per capita basis, and 4.4 times higher than Aboriginal and Torres Strait Islander tertiary education expenditure per head (2012-13, ROGS 2014: Table 2). 95 additional nurse graduates were required in 2012 to create parity in graduation rates between Aboriginal and Torres Strait Islander and non-Indigenous students (see Table 3b). Based on Aboriginal and Torres Strait Islander tertiary education expenditure of $1,099 per head, total expenditure of $104,405 (2012 amount) would be required to achieve this target This expenditure would reduce the need for high levels of government “reactive” and “preventative” expenditure on social security, public order and safety services (Forrest 2014). The expenditure is modest, education gains are immediate and potential employment gains are substantial.
Redressing institutional and cultural barriers to higher education completion rates generates high individual and community economic gains, as well as additional government revenue. The following is an example of wasting government expenditure.
Example 2: Wasting government expenditure
Current higher education government expenditure on Aboriginal and Torres Strait Islander nursing is ‘wasted’ if many students do not graduate and enter the professional workforce. Of the commencing Aboriginal and Torres Strait Islander cohort of 304 students in 2010, 201 students did not graduate. This expenditure ‘waste’ of an estimated $220,899 declines to $117,593 if Aboriginal and Torres Strait Islander non-completion rates are on par with those of non-Indigenous nursing students. Government budgets benefit from expenditure savings and additional savings from reduced reactive expenditure on social security payments and potential additional revenue (employment taxes).
6.4 Success breeds success - role model effects
Increasing completion rates provide positive signals to Aboriginal and Torres Strait Islander young people to become engaged in study and/or work. Multi-generational unemployment and associated risky behaviours impact on Aboriginal and Torres Strait Islander young people’s development and identity. Increasing professional employment and economic independence enlarges the pool of role models for young Aboriginal and Torres Strait Islander people.
6.5 Building Aboriginal and Torres Strait Islander nursing health workforce capacity is a cost-effective approach to ‘Closing the Gap’
Improvements would occur in cross-sector indicators in health, employment and economic participation. The following is an example of how additional nursing and midwifery employment can be created to meet identified targets.
Example 3: Creating additional nursing and midwifery employment to meet parity targets
To meet a population parity target of 3% of all nursing and midwifery employment requires employment of an additional 6,516 Aboriginal and Torres Strait Islander nurses and midwives (see Table 8). Assuming a three-year phase in period by employing 2,172 more Aboriginal and Torres Strait Islander nurses and midwives annually at an estimated annual average wage of $66,000, government expenditure per head of Aboriginal and Torres Strait Islander population would be $205 annually using the RN Year 4 minimum wage NSW (ANWF 2014: 27, Australian Government Budget Papers 2014-15, Forrest 2014: 18, 21, ROGS 2014: Table 7).
Putting this into perspective, $205 per Aboriginal and Torres Strait Islander head expenditure on an additional 2,172 Aboriginal and Torres Strait Islander nurses represents, on an annual per capita basis is equivalent to: § 0.5% of total government direct expenditure on Aboriginal and Torres Strait Islander people § 2.3% of Aboriginal and Torres Strait Islander health expenditure § 3.2% of Aboriginal and Torres Strait Islander social security services expenditure (ANMF 2014: 27; ROGS 2014: Tables 2, 7) The contribution to improved employment, economic participation and health outcomes would be substantial.
6.6 Multiplier effects of a targeted impact investment: Closing parity gaps in employment, health and education
“(T)he economic benefit of ending the (‘Closing the Gap’) disparity will compound to billions of dollars and eventually, through economic multipliers, to tens of billions dollars each year” (Forest 2014: 6).
The positive multiplier effects of a fiscal stimulus on national output, employment and income are well known in economic and policy circles (Burress 1989, Gretton 2013, The Economist 2009). However, macroeconomic growth does not necessarily ‘trickle down’ to disadvantaged communities (Gregory & Hunter in Burkett 2012). Intervention in the form of a targeted impact investment is needed to achieve 3% Aboriginal and Torres Strait Islander employment in nursing and midwifery.
Multiplier analysis provides a guide to achieving this, by assessing the impact of additional employment of Aboriginal and Torres Strait Islander nurses and midwives on overall Aboriginal and Torres Strait Islander employment (ABS 2009). Meeting a government aim and population parity target of 3% employment for Aboriginal and Torres Strait Islander nurses and midwives requires 6,516 additional nurses and midwives (see Table 8). Using a three-year phasing-in approach would require 2,172 additional Aboriginal and Torres Strait Islander nurses and midwives in the first year.
Results of the multiplier analysis of this initial annual investment are presented in Table 10 in Appendix II, along with technical notes. The analysis is based on a conservative multiplier effect of 1.6 on employment and 1.6 on income from the initial expenditure (initial effect). That is, for every additional job created or dollar invested, an additional 0.6 jobs and 0.6 more income is generated (secondary effect). The time frame for short-run impacts may be less than two years and longer for final impacts to flow through. The time frame will be shorter in smaller regions.
Example 4: Multiplier effects of closing the parity gap in Aboriginal and Torres Strait Islander nursing and midwifery employment
An additional 2,172 Australian Aboriginal and Torres Strait Islander nurses and midwives would reduce national Aboriginal and Torres Strait Islander unemployment by 1.1% (initial effect), and eliminate unemployment over time due to secondary effects assuming employment increases are distributed in areas of high unemployment. Secondary effects would increase Aboriginal and Torres Strait Islander nursing and midwifery employment to 7,934 people as a result of the 1.6 multiplier effect. Additions to employment after the initial effect (Stage 2) would depend on government rather than market decisions. Increasing the proportion of Aboriginal and Torres Strait Islander nurses and midwives in the current workforce would largely close the employment parity gap, as well as contribute to the Australian Government’s stated aim of achieving a 3% target in the public service. Income effects would be equally substantial. Regional and remote area benefits would be magnified in communities without established labour markets.
The multiplier effects of investing in the Aboriginal and Torres Strait Islander health professional workforce would spread through communities and across sectors, particularly if this investment takes place within an appropriate policy implementation framework such as the NATSIHP. It is important to note that multiplier analysis is limited to quantifiable economic gains. It does not include equity or externality type benefits that are additional to direct market benefits. These include substantial community benefits.
6.7 Resource boom and resource curse effects
The downside of the long-running resource boom has been the resource curse, the negative impact on Aboriginal and Torres Strait Islander people and communities not directly engaged in mining arising from high housing, food and service prices (Bankwest 2014; Hunter 2013; Langton 2012). Waning of the Australian resource boom may lead to significant income and employment losses for those directly involved in mining in many Aboriginal and Torres Strait Islander communities. Investments in the health workforce would compensate for this and enable the regeneration of several rural and remote communities.
6.8 Improved government budgets
The scale of strengthening government budgets arising from greater Aboriginal and Torres Strait Islander employment, productivity and increasing life expectancy over a twenty-year time period is estimated as:
§ $11.9 billion net increase in government revenue (mainly tax payments from increased employment) § $4.7 billion less government expenditure on social security and health
§ savings from expenditure on justice - decrease of 89%, social security - decrease of 54%, and health - decrease of 33% (Deloitte Access Economics 2014).
6.9 Economy-wide benefits
Targeted government investment to increase capacity in the Aboriginal and Torres Strait Islander nursing and midwifery workforce is cost-effective. It would enable population parity in Aboriginal and Torres Strait Islander nursing and midwifery employment and contribute to government policy aims, as well as generate broader national economic benefits due to the multiplier effects of the initial investment.
Deloitte Access Economics (2014) estimates that achieving parity in employment and health outcomes would increase GDP/national income over a twenty-year period by 1.2% higher in real terms — equivalent to around $24 billion.
6.10 Political choices and promoting parity
A focus on boosting the Aboriginal and Torres Strait Islander nursing and midwifery workforce contributes to multiple ‘Closing the Gap’ targets. Implementing higher education and workforce policy reforms involves a long lead time. Therefore, political decisions regarding promoting parity are needed in the short-term. Strategies aimed at achieving ‘Closing the Gap’ in any one area will not work in isolation (Deloitte 2014, DSS 2012, ROGS 2013: 2.11).
Investing in Australia’s Aboriginal and Torres Strait Islander nurses and midwives is not merely good health policy, but a cost-effective multi-sector strategy that would generate a range of local, regional and national economic benefits.
