The value of our collective know-how has never been higher.
The Fairfax-Lateral Economics wellbeing index shows the worth of Australia's human capital - the knowledge and expertise of its people - has reached a record $16.7 trillion. Nearly $615 billion was added to the total in 2014.
The index's measure of human capital grew by $157 billion in the December quarter, the biggest increase in nearly two years. The result was driven by solid growth in the proportion of adults with post-school qualification - the value of adult formal education was up a healthy 3.5 per cent in the quarter. This trend means Australia has a better trained workforce and a more informed population. The wellbeing index uses a range of indicators to provide a superior gauge of national welfare than traditional economic measures such as gross domestic product.
The index's author, Dr Nicholas Gruen, said the surge of investment in know-how has done far more to boost national welfare than the recent mining boom.
"Few things contribute more to Australia's collective wellbeing than education," he said.
The increase in the value of know-how reflects a public recognition of the importance of skills in the modern labour market, in which growth in knowledge-based jobs has been strong.
"The fact is that the market for labour is now generally more skill intensive," Dr Gruen said.
Two other components of human capital - early childhood development and schooling - also made a positive contribution to wellbeing in the quarter.
However, a rise in long-term unemployment, which contributes to skills atrophy, was a modest drag on the value of Australia's human capital. Long-term unemployment, which has risen sharply over the past year, was $1 billion drag on wellbeing in the December quarter.
Strong growth in human capital in the December quarter has helped boost the index of Australian wellbeing after a poor patch in the first half of 2014. Overall, the index grew by 0.5 per cent in the quarter, in line with growth in gross domestic product. There was a marked decline in the wellbeing index in the first half of 2014 but it returned to growth in the second half of the year.
One reason for the index's poor performance during much of last year was relatively weak growth in national income, a key component of the wellbeing measure.
The index results underscored how untreated mental illness and obesity are a major drag on the nation's wellbeing.
The wellbeing cost of untreated mental illness last year reached $195 billion, up 2.1 per cent on 2013. The cost of obesity to collective wellbeing jumped 6 per cent in 2014 to $128 billion. The wellbeing cost of obesity has surged over the past decade and it remains one of the fastest growing components of the index.
However, the negative wellbeing effects of untreated mental health and obesity were offset to some extent by two other health indices - an improvement in life expectancy and preventable hospital admissions.
