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• Apprenticeship and traineeships: Federal funding worth $2.7 billion was provided in the 2021–22 budget
for creating around 170 000 additional apprenticeships and traineeships. • Support for women: The 2021–22 budget offered support for women in education through STEM
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scholarships in partnership with businesses, along with funding for 50 000 places for training in non-traditional trades. • Scholarships and other: The Rural and Regional Enterprise Scholarships program is designed to increase educational opportunities for young people in regional and remote communities, to complete their tertiary training. Additionally, in 2020 during the COVID-19 pandemic, the Australian government decided to invest around $300 million to provide 12 000 supported tertiary education places designed to help guide departing Year 12 students into areas of skill shortage in the labour market. This is on top of creating an additional 17 000 places in 2021. • The JobTrainer Fund: The COVID-19 lockdowns in 2020 caused over 1 million Australians to be unemployed. In response, the Australian government initially allocated $1 billion to set up the JobTrainer Fund to create over 340 000 additional free or low-cost training and job retraining places to ensure the unemployed and school leavers have the wanted skills needed to get a job. The 2021–22 budget increased financial support for the JobTrainer Fund, creating an additional 163 000 free or low fee training places for school leavers and the unemployed to up-skill in areas like health, education, IT, agriculture and science.
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How government budget outlays on education and training affect living standards
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Government budget outlays on education and training can help to make aggregate supply conditions more favourable, strengthening many aspects of material and non-material living standards, by improving domestic macroeconomic conditions leading to better living standards. This improvement can again be illustrated by referring to the AD-AS diagram shown in figure 5.6 (P xxx) with the outward shift in the AS line (the rise from AS1 to AS2 ) because education outlays cause a rise in productive capacity.
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Budget outlays on education and training can increase the non-inflationary rate of economic growth
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There are several ways that budget outlays on training and education helps to boost productive capacity and aggregate supply, and accelerate the sustainable, non-inflationary rate of economic growth: • In the long term, it improves the quality of our human capital resources, making workers more productive, adaptive and innovative, and lifting Australia’s dynamic and technical efficiency. • Improved training can ease Australia’s skills shortages or bottlenecks that would otherwise limit national production and restrict the growth in Australia’s productive capacity, AS and potential rate of growth in GDP. • By increasing efficiency and easing labour shortages, it slows the growth in wage costs, strengthens business profitability and international competitiveness, and makes aggregate supply conditions more favourable, encouraging business expansion rather than closure. Budget outlays on education can slow cost inflation and improve international competitiveness
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Outlays on education and training can slow production costs for businesses. In the long term, this promotes aggregate supply and eases cost inflation pressures in two main ways: • As mentioned, improving our human capital helps to make labour more efficient (it increases GDP per hour worked), slowing business costs and allowing firms to sell their goods profitably at lower prices, and strengthening international competitiveness. • It helps to ease the skills bottlenecks that would normally be reflected in higher wage costs and prices.
Budget outlays on education and training can lower structural unemployment In the long term, budget outlays on education and training help to reduce structural unemployment: • Having the right skills can help to make our labour force more employable and job ready, reducing structural unemployment that is often caused by the mismatch of skills and job requirements. • By easing skills shortages, budget outlays on education and training can slow the growth in wage costs that otherwise would occur. This encourages business expansion, fewer closures and improved competitiveness, leading to less structural unemployment. 406
Key Concepts VCE Economics 2 Units 3 & 4 Eleventh Edition
