RECENT data from the Australian Bureau of Statistics on Australia’s new babies show that, during 2010, at 297,900, more babies were born than in any year previously.
Does this mean that we are experiencing a new baby boom? The short answer is, no. More babies were born simply because there are more potential mothers than at any time previously.
In fact, the desire to have babies has declined somewhat since the last time we saw an increase in the number of babies per woman. From its nadir in 2001 through to 2008 – the period of the last economic boom and just before the GFC – the fertility rate rose from 1.73 to 1.96. Since 2008, the fertility rate has in fact fallen, to 1.89 in 2010. For a population to reproduce itself, the fertility rate needs to be about 2.1. Australia has not experienced this since the mid 1970s.
Fertility depends in part on the use and technology of contraception and the age when women decide to have babies. Most of the decline in fertility during the past 30 years of the 20th century was due to the increasingly widespread use of modern contraception and the decision of women to delay babies until later in life.
The median age for mothers of new babies has now risen to over 30 years, up from 25 years in the early 1970s. In fact it is only women in their 30s who are showing an increase in fertility. For all other age groups, fertility is falling.
Part of the increase in fertility in the early 2000s, therefore, can be explained as being ‘catch-up’ by women who started to delay having babies in the 1970s due to the use of the pill. This is what the ABS terms a ‘tempo effect.’ Women born in 1970 reached their 30s in 2000. Thus, around 2000, there was a peak in the numbers of ‘delayed births.’
The intriguing thing is that fertility also depends in part on the state of the economy. In the 1930s the fertility rate dropped dramatically in the wake of tough economic times, whereas in the 1950s babies boomed as prosperity returned to post WWII Australia. And again, in the 2000s up to 2008, the economy boomed and fertility rose.
It is difficult to sort out the tempo effect from the effects of the economy on the number of babies being born.
However, the Productivity Commission has concluded that the buoyant economic conditions of the 2000s prior to the GFC contributed to the rise in fertility during that time. (Also contributing was the availability of baby friendly policies such as the Baby Bonus and the Family Tax Benefit A.). It follows that uncertain times brought about by the GFC may have cooled off the desire to have babies during the past two years.
What will happen next? Australia has been spared from most of the effects of the GFC by a combination of good luck (being in the right place at the right time) and good policy (an effective fiscal stimulus in a state of low public debt, together with state-of-the-art monetary policy). Thus any effects of the GFC on the decisions of potential mums and dads to have babies are likely to dissipate very soon (if it hasn’t already).
Australia almost certainly faces good economic times. We are therefore likely to see even more babies in the years ahead; but it is most unlikely that there will be a new baby boom. The most likely outcome is to see fertility rates stabilise around where they are at the moment. Thus for the Australian population not to fall, we will still rely on immigration to make up the numbers.
• Peter Kenyon is professor of economic policy at Curtin University’s Graduate School of Business.