Babies a bonus for small nations

Sixteen years after issuing his catchphrase, “have one for mum, one for dad and one for the country’’, in launching the Howard government’s $3000 baby bonus, Peter Costello’s call for the Morrison government to encourage Australians to again add to their families is timely. COVID-19 has all but stopped immigration in its tracks, for now. Australia is struggling with skills and labour shortages in fields such as nursing, aged care and engineering and construction. While immigration, post-COVID, would provide a quick solution to such shortages, Mr Costello is demonstrating some admirably long-term thinking, looking decades ahead.

As he said on Monday, population growth for its own sake would not improve the nation’s standard of living. But boosting the birthrate, which has fallen to 1.65 babies per woman, or at least stemming its decline, is a critical counter to the nation’s ageing demographic. He is arguing for a younger Australia rather than a Big Australia.

Emerging pressures in the aged-care sector, considered in the context of Treasury’s Intergenerational Reports, launched by Mr Costello in 2002, make a compelling case for the nation’s couples to have more children. In 1975, there were seven working Australians for every person over the age of 65. By 2050, there are likely to be 2.7 workers supporting every retiree. By 2047, a quarter of our population is likely to be over 65. Even with today’s tax base, government and taxpayers are struggling to keep up with the growing demands of the aged-care sector. Last month, the Morrison government’s Population Statement forecast the nation would have 1.1 million fewer people by 2031 than it would have without the impact of COVID-19. The population would also be older, it said.

On Tuesday, former NSW premier Bob Carr said the Australian economy was too dependent on population growth and argued for a smarter approach that would focus on productivity. We certainly need productivity growth, and government, business and unions need to use the opportunity afforded by COVID-19 to agree on sensible reforms. But Mr Carr, a patron of Sustainable Population Australia, which advocates for controls on the ­nation’s population growth for the sake of the environment and quality of life, is overlooking the advantages of natural population increase. These include building demand, new opportunities and confidence.

As premier, Mr Carr overlooked the potential for growth in Sydney when he declared it “full’’ in 2000 when it had about 4 million people. It is now close to 5 million, and is stronger and more prosperous than ever. Backing natural population increase and immigration with infrastructure is the key to sustaining a larger population and building on its advantages. Declaring Sydney “full’’, unfortunately, prompted Mr Carr’s and subsequent Labor governments to slow the expansion of the city’s transport infrastructure. The Coalition has reversed the trend; but catching up with the city’s needs is a long, slow process. Expanding water infrastructure is also essential and no Australian capital city has had the benefit of a major new dam for decades. As the La Nina weather pattern brings heavy rain during summer, too much of it, as usual, will drain away and pour into the ocean, leaving cities and the land ill-prepared for the inevitable drought years that will follow.

Treasury’s next intergenerational report, postponed until next year’s budget, will refocus attention on demographics. Since the mid-1970s, the number of births per Australian woman has been below the rate of 2.1 needed for a steady population. The baby bonus was frowned upon by fiscal purists and others as “middle-class welfare’’. But the payment, and the focus on the importance of building up the population, drove a marked rise in the nation’s fertility rate, which topped out at 2.02 babies per woman in 2008 — a trend labelled the “Costello hump”. Josh Frydenberg has alternatives to another “baby bonus’’. But the conversation is one the nation needs to have. Demographics is destiny.