The rapid ageing of Australia’s population has long been presented as
one of the most serious challenges facing the nation in the coming
decades. It is the result of two factors: declining birth rates and longer
life expectancy. Given that we would understandably meet any social policy
initiative aimed at reversing longer life expectancy with open hostility,
governments have targeted increasing family fecundity as a panacea for the
problems of an ageing population.
Ostensibly, this objective might seem justified in light of the country’s
current fertility rate of just 1.7, which is well below the required
replacement rate of 2.1. The reality is quite the opposite. Efforts to
raise family fertility would simply contribute to increasing the financial
strain on governments and individuals through higher costs for childcare,
education and the many other expenses implicit in an age demographic ‘bubble’
at the youth end of the scale.
The most appropriate form of public policy to address the adverse
effects of an ageing population is not to create an alternative problem;
rather, it is to legislate effectively for the maturing populace, and
thereby share the elevated financial strain evenly.
Increasing family fertility is not the answer to an ageing population.
Moreover, this phenomenon is not the ‘crisis’ that the media and some
politicians have suggested. While it may not be a cataclysmic event as
such, it is an area of concern that policy makers should take steps
In an Occasional Paper published by the Department of Family and
Community services, the reasons for a falling fertility rate were
analysed. A consistent theme was the financial burden of raising children.
This burden can be felt by the individual through caring costs, providing
costs, and as an ‘opportunity cost’, one of which is lost time in the
Government equally incurs a cost through service provision –
childcare, allowances, education and the like. Any attempt to raise
fertility rates will causally increase the cost burden for individuals and
governments. When an ageing populace is already placing growing pressure
on the public purse, the last thing we need is extra demands from the
opposite end of the age spectrum.
Proponents of boosting family fertility point to the need to measurably
increase the size of the labour force, and thereby expand the pool of
prospective taxpayers. It is suggested that we need the number of working
age persons to be such that they can support those in retirement that are
living longer and consuming more. This notion is flawed on a number of
First, with increased fertility large numbers of the populace would be
spending less time in the workforce, and more time acting as carers
(unless there were significant subsidized childcare options). If calls to
provide across the board paid maternity and paternity leave were acted on,
higher family fertility would result in massive cost blowouts for
governments and business.
Secondly, our tax arrangements are shifting such that income tax is
becoming less central to the government’s revenue streams. This shift is
likely to continue making income tax reliant initiatives antiquated.
Attempts to raise population levels so that the number of working age
personnel increases is a move in the wrong direction.
Thirdly, even if we accept that increasing the working age population
is the answer, a higher fertility rate is not the mechanism to achieve it.
Any increase in family fertility would not measurably enlarge the working
age population; it would only incrementally augment it. Further, the
increase itself (no matter how minimal) would not be felt for at least
20-30 years. Predictions of an ageing ‘crisis’ are expected to be felt
sooner than that.
Increases in the immigration intake might offer an age diverse spread
of working age participants, yet a marked upsurge in immigration is not
electorally appealing, and is unlikely to address all the problems of
ageing. Rather, it would simply provide a further contribution to it.
Irrespective of the listed points above, it is possible that the jobs
market would be unable to sustain the measurable increases in work
eligible personnel increased fertility may create. This could be the case
even with the Howard Government’s most impressive rate of employment.
If increasing the fertility rate is not the answer to an ageing
population, what is? Before signposting some alternative policy
approaches, let me throw some cold water on the doom and gloom predictions
as they stand. Professor Gary Burtless of the Brookings Institution, a
leading USA think tank, has written a paper indicating ageing is
"less worrisome than popularly supposed". He comes to this
conclusion by analysing dependency as a collective. His findings suggest
any increase in aged persons expenditure is measurably matched by
decreases in youth expenditure due to declining fertility rates.