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ANALYSIS: Before the election, Labor promised policies to lift the declining birthrate, but there is little evidence they will actually work. By Viva Hammer.
Why birthrate policies don’t work
Before the election, Treasurer Jim Chalmers promised a Labor majority would deliver more Australian babies – if money can make babies.
Parents with incomes as high as $530,000 were promised childcare subsidies up to three days a week. This means about 100,000 families are able to get extra hours of care.
There is also a billion-dollar fund set aside for childcare construction, expanding the Cheaper Child Care initiative. Chalmers promised that 160 childcare centres will be built where they are urgently needed, such as in remote suburbs and regional areas.
The promises are a serious response to the Australian Bureau of Statistics’ announcement that Australia’s birthrate had dropped again, to 1.5 children per woman.
This is no surprise: Australia’s birthrate has been falling for 50 years. Our birthrate is just above the United Kingdom’s, at 1.44, and Canada’s, at 1.32, and below the United States’, at 1.6.
Asia has even fewer children, with South Korea the stand-out at 0.7 children per woman. There is only one developed country in the world that has enough children to replace its population.
Yet Australia’s population is in no danger of declining, even though Australian women are not giving birth to enough children to replace current Australian adults. That’s because the country welcomes young immigrants and because Australians are living longer. The net result is a demographic mix that works well today. We have enough workers to support our dependents, young and old.
But the population continues to age and fewer children are being born. If these trends continue, with longer lives and a declining birthrate, paying for retirement will become a challenge. This is particularly because our top sources of immigrants – China and India – have declining births, too.
Births are dropping globally, and so immigration is only a temporary solution to Australia’s demographic challenge. Whichever way you play the numbers, nations that don’t have enough children to replace themselves will eventually disappear.
When it comes to national demography, birth rates or mortality or immigration, voters demand governments do something. The results are rarely what people expect.
China is the prime example of top-down interference with baby making. Immediately after the Communist Revolution, the government wanted more children to increase the country’s power base. By 1979, however, China’s mortality had fallen dramatically, and the population was growing too quickly. The notorious one-child policy was rolled out.
Through persuasion and coercion, China’s one-child policy was so effective that in 2015 the policy was softened to allow couples to have two children. In 2021 couples were allowed three children and in 2023, Sichuan Province announced that couples may have as many children as they want.
The Chinese are not obliging their government, however. Birthrates hover about one child per woman, exactly what was originally demanded. The government is campaigning to increase births, but there are now more deaths in China than births.
The one-child policy may have been the cause of fertility decline in China, although it may have happened anyway. Taiwan had no such policy and its birthrates declined faster and earlier than China’s.
Japan is another Asian tiger with birthrate problems. It is the pioneer in low birthrates and failed policies. Japan recorded below replacement fertility in 1974, and for 50 years birthrates have declined. Japanese leadership has wrangled with its people to get them to change their ways. It has offered an ever-changing menu of childcare subsidies, parental leave and child allowances. After decades of these attempts, the Japanese are still having about 1.3 children per woman. The population is ageing and declining.
Study after study shows that governments don’t make a dent in people’s childbearing choices in the long term. Hungary currently offers the most generous package in the world. Baby grants are equal to five years’ minimum wage. Families with more than two children get big tax cuts and significantly subsidised mortgages. Hungary’s birthrate increased slightly in response to these incentives and then slumped again.
Economists have found financial incentives may make women have children sooner but do not persuade them to have more. This is a conundrum. Why don’t financial incentives encourage childbearing? And why do governments keep offering them?
On the question of why pro-natal incentives don’t work, researchers offer two answers. Some say that what’s been offered so far has not been large enough to change women’s minds. Others say that no financial incentive could ever be large enough to persuade a woman to have a child.
“It’s not just the nappies and food and daycare and school,” says Jasmin, a mother of two in Melbourne. “It’s the time. The time is worth more than all the rest combined.”
Jasmin took six months off after each of her children was born. Her partner took the next six months off. They each got partial pay. “It’s not just because my partner and I could be working instead of being with the baby ... We take turns hanging with friends. The kids’ sleep schedule, all that. Having a child is not compatible with being an adult, doing adult things.”
Childcare is relentless, day and night. Because of housing costs, children can stay in the parents’ home well into their 20s. Children constrain parents in the kind of work they can do, the kind of holidays they take, the home they live in. Children affect every aspect of parents’ lives.
When everyone had children, the costs were shared and benefits reaped through the life cycle. When people discovered they could get just as many social and financial benefits having no children as having many, however, they stopped having children.
That’s what’s happening today. The costs of child rearing fall overwhelmingly to a subset of adults – called parents – and the benefits of a grown child who becomes a taxpaying worker accrue to everyone, including the child-free. Parents don’t get any special return on their investments. Maybe an occasional visit. Maybe some birthday flowers.
What would it take to reimburse a parent for the costs of child rearing? To make up for some financial outlays and some of the time, if not all?
Let’s start at a million dollars. Paid through the life of the child, no matter who’s in power. Not taxable. That might begin to redress the imbalance, to recognise the real costs of parenting.
Those kinds of payouts for children are never going to happen, even though the country spends that amount on a single old person with the standard heart, lung and dementia issues. Old age has the political muscle to demand big subsidies that no one questions. Children do not have the same political muscle, even though spending on children is an investment in the future and old-age spending is not. The fewer children that are born, and the longer people live, the more political power moves towards old age.
It might be that even a government grant of a million dollars per child wouldn’t be enough to persuade a woman to have one. I’ve been interviewing women with four or more children over many years. Not one of them mentioned government subsidies as a factor in their family size.
On the contrary, they are driven by a quest for meaning, for sharing. Their eyes are towards the future. They think about their family as contributing not to themselves but to community. Having children is the paramount value in their lives and they sacrifice what we would consider essentials to have them. They may not have cars or holidays. Their children may share rooms and clothes. They may never own a home.
We are left asking what the impact will be of the treasurer’s promise for children and childcare on Australia’s birthrate The answer is the same as the impact of the Albanese government’s previous $4.5 billion subsidy on childcare. Childcare got more expensive and the birthrate dropped. The childcare industry absorbed all the benefit and parents were left in the same place they were before.
It might be time for the government to let go of its plans for Australian births. Women have children when they believe in the future, beyond the next election or even their own lives. Something bigger than the comforts of the here and now. In the words of Ralia, a mother of five in Sydney: “When I was pregnant with my first, before I experienced my first labour, I dreamed of 10 children. I’d still like to get there, but between the ideal and the real you have to have broad shoulders and rings under your eyes.”
This article was first published in the print edition of The Saturday Paper on May 24, 2025 as "Baby blues".
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