Australia needs a policy refresh to support higher fertility

Australia’s slumping fertility rate and plummeting immigration due to COVID-19 need an immediate policy rethink, the nation’s leading demographer has warned.

The issue of a Big Australia has resurfaced in the wake of the government releasing its first Population Statement.

Australia’s slumping fertility rate and plummeting immigration due to COVID-19 are both threatening the economy’s long term prospects and needs an immediate policy rethink, the nation’s leading demographer has warned.

Professor Peter McDonald said the 2019 fertility rate of 1.65 babies per woman was the lowest in the nation’s history, down substantially from 1.97 a decade ago, and could plunge further without specific policies to stabilise it.

“Victoria tends to be a lead indicator of the nation’s fertility rate, and it stood lower at 1.56 in 2019, so that is a serious concern,” Professor McDonald told The Australian. “Also, people tend to delay the decision to have a child in times of economic uncertainty.

“Falling fertility makes a big hit on the future labour force at a time when more people are reaching retirement age and needing greater support from the taxpayer. This is a significant economic issue.”

The issue of a Big Australia has resurfaced in the wake of the government releasing its first Population Statement, which projects the nation will have 1.1 million fewer people by 2031 than it would have without the coronavirus pandemic. Professor McDonald said it was time for a fresh look at childcare policy to support families to have more children, and also to offer more family allowance at the lower end of the income scale.

“Government support is perhaps a little too geared to work and benefits to help mothers work,” he said. “The bottom 30 per cent of people in terms of income don’t receive that much support from the government, and this is something the government can consider to support fertility.”

He said migration is the other lever to support population growth, and while he expected this could be ramped up quickly post-COVID-19, the mix of migrants could be altered to better support future population growth.

“The migration intake has relied too much on international students in recent years. We need to go back to more temporary skilled workers,” Professor McDonald said.

“These are the workers who employers want. They are more skilled than students, and they come from a broader range of countries.”

Demographer Liz Allen from ANU’s Centre for Social Research and Methods said a low fertility rate was not, of itself, a problem.

 

“The problem is that the population is ageing and … there are too few people of working age replacing those leaving the workforce due to retirement,” Dr Allen said.

“Very low fertility rates are extremely difficult to counter once they become very low, risking population decline. Once a population is in decline, more and more immigration is needed to ensure the population can sustain itself economically.

“Government intervention to increase fertility rates is best focused on addressing the issues that prevent Australians having their desired family size: housing affordability, childcare costs, and gender inequalities, especially in the workplace,” she said. .

Urban planning specialist Shane Geha warned that the COVID-19-induced population lag could rip as much as $2800 a year out of the pockets of every Australian.

Dr Geha said the only way to cover the shortfall is to bring in work-ready migrants who can contribute 40 years of income taxes to help build the nation’s ­future infrastructure.

“Only 48 per cent of people are paying tax and that figure is steadily dropping,” he said. “We need to act now because in a couple of decades the budget will never be able to balance. Migration is the obvious answer; a country like ours can support millions more people.”

He said he was not concerned about where the migrants came from provided they were contributing to the economy.