It’s no secret that Australians are having fewer children.
The latest ABS statistics reveal our fertility rate was 1.7 – well below the so-called replacement rate needed to keep the population growing.
The last time our fertility rate was this low we started literally paying people to have babies. All official predictions are that the number of babies will only decrease in the years to come.
It’s not that we’ve suddenly gotten over babies. Three quarters of Australian women and 70% of men aged 20-24 either have or want children.
But women, thankfully, have an increasing ability to choose when, and if, they have them. Four out of five sexually active heterosexual women aged 16-49 in Australia are using contraception. For most women, having a child, whether planned or not, is now an active choice.
But child rearing as an active decision raises its own set of questions, and challenges. Is it feasible? Responsible? If not now, when?
Almost three quarters of people without children say that being able to afford to support a child is an important consideration in their decision. And they’re right. Having children is one of the most expensive things one can do.
Let’s start with conceiving and giving birth. If necessary, an IVF cycle costs around $10,000 – and it’s not unusual to do more than one. If you want to use a private hospital, your health cover needs to include “pregnancy and birth-related services” for at least 12 months beforehand. That means roughly an extra $2,400 on premiums before giving birth. That’s before the thousands of dollars out of pocket.
Then there’s the pram ($500), the bassinet or cot ($200), and the car seat ($300). Some of these you might be able to pick up secondhand. But disposable nappies cost around 30 cents each. That doesn’t sound like much until you consider eight nappy changes a day for two years – that’s $1,700 on nappies. Around 140,000 families experience nappy stress. You could switch to cloth – but then you need to grapple with a higher upfront cost, all that laundry, and of course the value of your time.
Starting to sound like a crappy financial proposition? It gets more expensive still.
Suppose the parent/s go back to work to pay for all these costs. An hour of childcare costs, on average, $11.20. That’s almost one third of median hourly pay. While childcare subsidies cover some of this, most parents still face out-of-pocket costs. If your child is sent home sick, you’ll need to take the day off work and still pay the fees. Talk about adding insult to injury.
Even once children go to school, the costs continue. Back in 2016, researchers estimated that it would cost a low-income household around $137 per week to raise a six-year-old girl. In 2021, respondents to a Suncorp survey reported spending over $100 per week on food alone for one child.
Parenthood brings more than just explicit costs. Being a parent can mean you earn less, both immediately after birth and in the long term. It can also hurt career progression. The parenthood penalty is especially pronounced for women.
There are costs, too, to the budget. In 2021-22, taxpayers spent over $18 billion on family assistance, and close to $10 billion on childcare subsidies. That’s not to mention the costs of schools and higher education.
So, yes. Having children is expensive – to individuals, households and economies.
Does this mean we should stop making babies? Is a lower fertility rate actually a cause for celebration?
From a purely economic perspective, the answer is no. Population growth is one of three things that drive GDP growth. Given that Australia’s fertility rate is below the replacement rate, most econocrats would love to see more people displaying a sense of national duty and asking what they can, ahem, do for their country.
Thankfully in Australia the choice to have children isn’t a decision made by governments. Ultimately, deciding whether to have children is, and should be, a choice made by people – individuals and couples who face their own unique costs and benefits, circumstances and preferences.
It’s no wonder that our tax and welfare system aims to sweeten the deal, and nudge us in the direction of having kids.
But if policymakers want a bigger Australia, they could and should do more for those who want to have kids. Increased incentives or lower childcare fees might help to boost population and participation. With the cost of living spiralling we can, and should, be helping parents.
Jessica Rozen (formerly Mizrahi) is an economic consultant and commentator. She has taught, researched and applied economics for over a decade
