Innovative people and education

The importance of human capital
The Cutler Report devotes a large amount of space to the issues surrounding the importance of “human capital” – that is the skills and attitudes of the people who work within organisations.

High quality human capital – essentially well-educated and highly skilled people – are essential to the development of an innovative society. As the Report notes:

“A highly‑skilled workforce is essential not only for the generation and application of new knowledge, but also to use and adapt the knowledge produced elsewhere.” (p45)

The actual role of education
The Report argues that the development of high quality human capital:

“requires attention at all levels of education: from early childhood education and schooling, through vocational education and training and higher education, and into the workplace”.

In relation to shortcomings in our current education systems and how they could better provide for high quality people who can either (or both of) innovate or adapt quickly to innovation, the Report emphasises the need to ensure an ongoing commitment to high quality teachers. It argues that:

“high quality teaching is a key driver of student performance and better student results means more innovation”. (p51)

Although it does not substantiate the link between teacher quality and innovation, it seems a difficult one to argue with, and most people will agree that good teachers are critical to the overall performance of an education system.

A decline in education?
The Report notes that despite this, there is evidence that the “academic aptitude” of Australian teachers has fallen in recent years. It quotes two main factors to explain this phenomenon:

• a decline in the average salary of teachers, relative to all university graduates; and
• the unwillingness or inability of education systems to offer merit‑based pay, as other professions do, to allow high-performing teaches to earn substantially more than the average.

The Report considers that such a pay system must appear unattractive to young university graduates and is acting as a disincentive to the best people considering teaching as a profession. If their skills cannot be recognised appropriately (as they would be in other professions) why should they consider teaching a viable long term career?

Without wanting to get involved in the politics that such a discussion inevitably generates, these appear to be sensible observations. At a time when almost all professions recognise the benefit of merit‑based remuneration systems, the rigidity of the pay scales of the teaching profession are not as attractive as they should be.

…and its link to a “hidden” decline in productivity?
In assessing Australia’s productivity and innovation, the Report notes that after strong productivity growth in the 1990s, there has been significantly slower growth since 2003. This has been masked by the huge increase in Australia’s terms of trade (the commodities boom).

The Report argues that the “productivity success” of the 1990s can be partly attributed to “the successful adaptation of new technology and new processes [that] are made possible by the strong rise in educational achievements that has occurred in the previous decades.” [p13]

In particular, the Report notes the increase in the number of school students (particularly girls) going through to Year 12 and then into tertiary education in the 1970s and 1980s, who then entered the workforce in the 1990s and were implementing the “innovation surge” of those decades.

Since then, however, investment in education has declined and relative proficiencies in literacy and mathematics have slowed.

This, combined with a relative decline in research investment, has resulted in a slowing of innovation at a time when we will need such skills more than ever.

Some positives
Not that it is all gloomy. The Report notes that many enterprises are investing in on‑the‑job training and are actively working on increasing the skills of their people and that there is strong recognition at all levels that our education systems must be adapted to meet the need for innovation. The current government has placed education reform at the centre of its overall reform agenda.

The role of immigration
The Report also notes the importance and contribution of skilled immigrants to national innovation and productivity. The Report calls for better alignment between immigration policies and innovation policy to allow Australia better access to the global talent pool. In particular, the Report recommends that:

“human capital should carry equal or more weight than economic capital and individual migration assessments” (Recommendation 5.2)