Funding Local Skills Training and Job Certification With New Money
The following is a submission to the Australian Government National Energy Workforce Strategy made in September 2024.
Today, new money is introduced into the economy by banks issuing loans to for-profit organisations. The banks know that the money spent makes a profit because they get back more money than they lent, and they cancel the loans. The government knows the money was spent doing something that produced a profit, but it has no control over what it was unless it purchases the goods and services of the profit-making organisation.
The government taxes the profits of the for-profit organisations and supplies some of the taxes to other for-profit organisations to train people and some to certify training.
A cheaper way is for the government to request banks to issue new money as loans to community organisations, like local schools, without requiring the organisations to repay the loans. However, the community organisations would need to demonstrate to the banks that the loans were utilised for skills training and job certification, and the banks would evaluate the acquired skills.
Introducing new money via bank loans to for-profit organisations with for-profit banks wastes 50% of the money with the banks and at least 50% of the remainder through tax minimisation by for-profit organisations — particularly those financed with “global capital”. Please read “Profit is not important — It is what you do with it”. (https://tinyurl.com/ac79hp29)
Every community in Australia has a school or access to a schooling organisation. If these schools have extra funds, they can extend them to adult skills training; however, funding through taxation is very expensive. Alternatively, the banks could lend new money to community organisations to localise skills training and certification.
The Australian Economy has low productivity because we waste billions of new dollars on unnecessary and expensive for-profit loans to transfer existing houses and other assets. These loans could be made with existing savings. New money needed in the economy could go to not-for-profit community organisations that build skills and expertise or other community infrastructure.
The government could trial this approach with skills training and certification in a local government area funded with new money. When successful, it could rapidly spread throughout the country without requiring the diversion of taxes from other community needs. The trial should involve a community bank with an agreement from the Reserve bank on how the bank should cancel the loan.
