Is there anything governments can do to break our baby drought?
Boomers are getting older and needier. Now a crash in global fertility is putting immense financial and social strain on all nations.
Australia is ageing, and ageing fast. Forty years ago, when Bob Hawke was prime minister and Anthony Albanese was leading campus revolts, the median age was 30; it’s now 39. If Albo, last boomer emperor, is still in the Lodge when he turns 100 in 2063 and as Covid babies hit middle age, the nation’s median age is expected to be 43.
Ageing societies tend to be sluggish, less dynamic and creative, probably not as productive, although Japan is bucking the trend on that last point through technological uptake (its GDP growth rate has been abysmal). “As societies age, there’s less appetite for risk, reform or experimentation,” Cato Institute economist Ryan Bourne wrote in The Times last week.
In older nations there are fewer start-ups and entrepreneurs, something Australia is already a laggard in. The latest IMD World Competitiveness Yearbook report reveals atrocious entrepreneurship of our managers in business; Australia was ranked 68th of 69 nations on this measure.
There are also dire fiscal consequences. As the 2023 Intergenerational Report outlined, with fewer working-age people expected across four decades, the tax burden on younger people – to pay for pretty much everything – will rise, while economic growth will average just over 2 per cent (compared with 3 per cent in the previous 40 years).
Older Australians are working longer, staying fitter and healthier. They’re mentoring Gen Z and millennials, as well as training the AI bots that one day may replace those younger workers. Liberation from drudgery? Fewer but more productive workers? Let’s hope so.
Optimists say there could be a dividend from this “silver economy” given we boomers are stronger in mind and body than previous generations, on fire in the knowledge and care economies; it must be the fresh air and phone-free play we had in abundance as children.
This national slide into middle age is because we’re living longer and there’s a slump in fertility rates. Some call it a baby drought. Much has been made of the post-pandemic migration boom. But even after we imported 969,000 people over two years, the population is still smaller than pre-Covid forecasts by the Morrison government.
The main reason is across the past six years we’ve had 412,000 fewer babies than expected. In 2023-24, the most recent estimate, Australia’s total fertility rate was 1.49, the lowest recorded. Absent migration, the replacement rate to stop population falling is 2.1 babies per woman.
On Thursday, the Australian Bureau of Statistics reported that in 2024 the natural increase (births less deaths) was 105,000; in the decade before Covid we averaged 150,000. In 2024, the crude birthrate (births divided by 1000 of the population) was 10.7. In the 1950s and early 60s it was double that.
Women are having children later, so the actual number of children born to a woman may not be as low as the TFR. (Technically that’s a moment-in-time estimate of the number of children a woman would have during her lifetime if she experienced the age-specific fertility rates for a given year at each age of her reproductive life.)
The collapse in the birthrate is unmistakeable, maybe unstoppable, and is worrying policymakers the world over. There is an array of ploys by governments to boost fertility, from natalist Viktor Orban’s baby engineering in Hungary through tax breaks and family diktats (not working), to efforts in Asia to get shy singles to meet and get it on, as you might say.
Donald Trump signed an executive order in February to expand IVF access, anointing himself the “fertilisation President”. He has liberated Elon Musk from DC duties to return to the family business.
More modestly, Albanese has made universal childcare his legacy-defining move. Is it time for Canberra to reintroduce a baby bonus to encourage families to “have one for mum, one for dad and one for the country”, as treasurer Peter Costello memorably put it two decades ago?
Fertility is falling everywhere, in rich and poor nations, secular and religious. Economist Jesus Fernandez-Villaverde estimates the global population will peak in 2055, three decades earlier than UN forecasts. “If you’re 55 or younger, you’re likely to witness something humans haven’t seen for 60,000 years, not during wars or pandemics: a sustained decrease in the world population,” the University of Pennsylvania professor wrote in The Spectator last August.
There are economic, social and cultural factors behind Australia’s baby drought. Research last October by Treasury’s Centre for Population said “low fertility is here to stay” because of complex and interconnected causes. Record rates of female labour force participation, declining housing affordability and societal norms around family composition continue to influence fertility decisions, the report said.
Economist Pelin Akyol points to the Household, Income and Labour Dynamics in Australia Survey for the key factors in the decision to have children. “Childcare is becoming increasingly important in decisions about having children, especially for women,” says Akyol, a research manager at the Sydney-based not-for-profit e61 Institute.
“This is not surprising with women spending substantially more time on childcare than men and often reducing their working hours as a result. Universal childcare is a step in the right direction for easing the financial burden on families that may help parents have the children they want.”
Akyol’s research with Kadir Atalay has highlighted the unintended consequences of policies that have aimed to improve fiscal sustainability and labour market participation of older women. They found raising the Age Pension eligibility age from 60 to 67 reduced grandmothers’ availability to provide childcare and influenced the fertility decisions of daughters.
When a mother qualifies for the Age Pension (based on her age), it increases the likelihood her daughter will have a child and the average number of children she will have (which is comparable to the impact from the introduction of paid parental leave policies).
Akyol tells Inquirer childcare is but one factor affecting the decision to have children, with the general cost of raising them the most important. “At the same time, having enough energy and time for a career has become increasingly important for women when deciding whether to have children,” she says.
Social scientist Alice Evans offers a provocative take on the fertility crisis, blaming the internet and smartphones. The King’s College London academic, who is writing a book titled The Great Gender Divergence, has identified a “cultural leapfrogging” where women anywhere in the world can tune into the Western frontier of gender equality that clashes with traditional societal norms.
“So, increasingly, young women are saying, I have different values, I have different aspirations, I’d rather be alone,” Evans told the Financial Times earlier this year.
As well, Evans argues young adults are staying home watching streaming services and eating delivered food rather than going out. In this digital solitude they’re losing the knack for socialising, meeting new people and partnering up. Research also shows men and women are living in different online social universes and thus have less in common politically.
According to Fernandez-Villaverde, there has been an enormous increase in the number of childless American women, from about 8 to 10 per cent in earlier times to about 30 to 35 per cent. “They are not getting married, setting up an independent life as a new household or even wanting to have children at all,” he told the US conservative Witherspoon Institute think tank.
“If a future president of the United States makes me the tsar of fertility, that’s what I would focus 99 per cent of my attention on.”
Nobel prize-winning economist Claudia Goldin has argued rapid economic growth has played a part in the astonishing decline in fertility since the 70s. In a working paper published last December, Babies and the Macroeconomy, the Harvard professor argues rapid economic change often challenges strongly held beliefs, and beliefs change more slowly than technology does and economies do.
“Traditional people are often catapulted into modernity with little time for beliefs, traditions and social mores to adjust,” Goldin argues. “Thus, swift economic change may lead to generational and gendered conflicts and rapid reductions in the birthrate.”
Like the US, Australia sustained a high fertility rate (around 3) for a quarter century in the post-war years. “The ‘baby boom’ was partly accomplished by glorifying marriage, motherhood, the ‘good wife’ and the home,” Goldin writes of the US. “Can a turnaround today be accomplished by glorifying parenthood, especially fatherhood, and changing workplace rules so fathers are not penalised by taking time off and requesting flexible work arrangements? One thing is clear: unless the negative relationship between income and fertility is reversed, the birthrate will probably not increase.”
Treasury’s report said people would like to have more children than they end up having. It suggests policies that support working parents, encourage egalitarian division of household labour, alleviate the financial risk of having children and promote housing security.
Demographers warn against radical interventions or even the cash parents have received in the past. Some argue the baby bonus introduced in 2004 ($3000 a child at birth, later increased to $4000 and then $5000) did not cause a rise in fertility.
Rather the bump was due to economic buoyancy from the mining boom. Or parents simply brought forward their plans to have children.
Forthcoming research by Akyol at e61, where I work as an adviser, will show the baby bonus led to about a 7 per cent increase in birthrates. “We see a sharp rise in births exactly nine months after the policy was announced, strongly suggesting a direct policy impact,” she says. “The largest increases were among third births and among women aged 35 to 39. This provides evidence that the baby bonus increased the total number of children rather than simply bringing forward births.”
At the National Press Club on Wednesday, Jim Chalmers spoke about intergenerational equity and a rising tax burden on young people, with acute pressures on the budget coming from health, aged care, defence and debt interest.
In outlining an agenda to make the budget sustainable and raise productivity, the Treasurer said the government had a responsibility to deliver for working people. “And an obligation to future generations to deliver a better standard of living than we enjoy today,” he said.
Breaking the baby drought, even producing those future generations, is becoming a patriotic duty.
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