Generation Z gloom means no baby boom

If we’re not in a baby drought now, we soon may be, experts warn, unless Gen Z finds its mojo.

Young couples in Australia are increasingly wary about starting a family, with cost of living and house prices among their key concerns.

They’re just starting to hit that ­decision point about starting a family, the nation’s Gen Zers born from 2000, but there’s a looming problem.

“All the evidence we’re seeing through surveys shows they’re the most pessimistic, the most misanthropic generation ever,” demographer Simon Kuesten-macher said. “Their thoughts are overwhelmingly negative.

“If they’re asked about housing they think they’ll never afford to have a house. Climate change is very high in their minds.

“This is an issue, because the nation’s birthrate is linked not only to levels of wealth and women’s education, but also to ­optimism about the future.”

Mr Kuestenmacher said while Millennials (born between 1982 and 1999) are doing OK in the baby-making stakes, at least on international comparisons, and are likely to keep it going for another decade or so, beyond that the nation’s birthrate could be set for a tumble. “I really think in a dozen years or so as Gen Z moves through their reproductive years, that could be when the birthrate takes a hit,” he said.

The nation’s falling fertility came under the spotlight again this week after a KPMG analysis warned of a “baby drought” after crunching recent Australian Bureau of Statistics birth data.

It prompted a discussion about the flow-on consequences for everything from migration to childcare to housing design.

Number crunching

The KPMG study found that since the post-Covid lockdown baby spike in 2021 – when a record 315,200 babies were born – births dropped to 289,100 in 2023, the lowest for almost two decades.

Sydney led the way, with births declining by more than 60,000 or 8.6 per cent in the four years since 2019, while for Melbourne it was 7.3 per cent. Perth and Brisbane were down by 6 per cent and 4.3 per cent respectively, while Canberra held steady, the study said.

KPMG economist Terry Rawnsley noted the nation’s fertility rate had been on a longer-term downward trend since 2008 when it was above two births per woman to reach the current record low of 1.63.

The 2023 Intergenerational Report offers a concise explanation of why: “Women have more options to pursue education and participate in the workforce than previous generations, and many prefer to establish their careers and achieve economic stability prior to having children.

“In addition, it is mainly women that take time away from their careers to care for children and to take on other unpaid care work, which could factor into decisions about child-bearing.

“Social trends, including changes to partnership patterns, increasing secularisation, and greater desires for self-fulfilment and autonomy may also be related to declining fertility trends.”

The IGR also called out economic uncertainty and job insecurity as drivers of more recent fertility declines in developed countries. Mr Rawnsley said local factors were also at play, particularly in Sydney and Melbourne, including high cost of living and unaffordable housing.

“Housing affordability has a big impact on fertility,” he said. “If a young couple can’t afford a two-bedroom apartment that limits the number of children they will have. It may be that future housing design should take this concern into greater account.”

But population expert Abul Rizvi said it was hard to argue Australia was in a “baby drought” when its fertility rate was tracking better than most contemporary developed countries.

Dr Rizvi, a former deputy secretary in the department of immigration, said birth rates had been falling across the developed world, including China and Russia.

“At 1.6 we are well above the average for the developed world and our major trading partners,” he said. “And if you combine this with our high immigration it means our age profile is younger.”

Does it matter?

Mr Kuestenmacher said the falling fertility rate was a manageable policy problem. “In all truth the birthrate doesn’t matter that much in Australia, at least at the moment, because we are an immigration nation,” he said.

The Demographics Group director Simon Kuestenmacher. Picture: Brendan Radke

Population expert Abul Rizvi

“The IGR shows us that every foreign-born person in Australia is an economic plus and every native-born person an economic drain. That’s because for the first 22 years of our lives we use more resources than we create, but for adult migrants we aren’t using those resources …”

Dr Rizvi agreed Australia could compensate for a low birth rate.

“If we maintain our migration levels at long-term levels around 235,000 a year, then even with a fertility rate of 1.6 our population will continue to grow to the end of the century, while the majority of developed nations are quickly approaching their population peak or even going past it,” he said.

A look ahead

The nation’s fertility rate is more than an economic issue.

For prospective parents wanting to start a family or have more children it is personal. Dr Rizvi said boosting support for childcare was one key policy lever that could make a difference for young families: “It may not increase the rate of fertility, but it would help reduce the risk of further declines.”

Former South Australian premier Jay Weatherill, now director of Minderoo Foundation’s Thrive by Five campaign, said the high costs of early childhood education and care were contributing to the decision of many not to have more children.

“Australia has some of the highest early learning costs in the world, and we know that for many families this is top of mind when they’re considering whether or not to have more children,” he said in backing calls to cap early learning fees at $10 a day and make it free for low-income families.

Housing design was another area where changes could support young families, Mr Rawnsley said. He said clever design work could result in smaller apartments refashioned to cater for babies and young children, rather than suiting double-income no-kids.

On migration as a lever to plug low birth rates, Dr Rizvi also said Australia should be wary of complacency.

“I can see that over the next decade or so there will be big changes as Russia, China, Japan and Europe age so much faster than us,” he said. “There will be a battle for migrants to fill skills gaps, and we can’t assume we are the first place they will look to.”

Mr Kuestenmacher said Australia could watch how other countries manage population declines in coming decades and copy the policies that work. “Once a generation becomes more optimistic about their future we know that birthrates can tick up.”