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ANALYSIS

Bargaining over babies: the hidden issue that dampens a desire to have children

I have two great kids and have always been keen on a third. But my partner thinks enough is enough. My long campaign to change her mind has been to no avail. Barring a Biblical-scale miracle, we're done.

One of the biggest decisions any couple will make is whether to have children and, if so, how many. But as Australia's population ages, the way mothers and fathers bargain over babies is increasingly important for the whole society, not just individual families.

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It's more than a decade since Peter Costello set the demographic alarm bells ringing with his famous call for Australian couples to have "one for the father, one for the mother and one for the country". The former treasurer made those remarks when the Howard government introduced its baby bonus in 2004 amid warnings about the long-term consequences of our ageing population. The fertility rate did rise between 2004 and 2008, although demographers question whether government policy had much to do with it.

But from a peak of 2.02 in 2008, the fertility rate has fallen back to 1.8, the latest figures show - not much higher than when Costello urged couples to breed for the nation. Finding ways to sustain a healthy birth rate is as important now as it was when Costello was treasurer.

From a peak of 2.02 in 2008, Australia's fertility rate has fallen back to 1.8.
From a peak of 2.02 in 2008, Australia's fertility rate has fallen back to 1.8. Photo: Natalie Boog

Research by Northeastern University economist Matthias Doepke and the University of Bonn's Fabian Kindermann has examined how couples bargain over babies and what might encourage them to have more. To do this they analysed data from the "Generations and Gender Program", which conducted surveys in 19 countries including Australia. Respondents were asked if they planned to have a baby (or another baby) and whether they had different feelings to their partner about the number of babies they wanted, and the timing.

It turns out that the difference of opinion I have with my partner over how many children we should have is common: many couples disagree about whether to have a baby, or another baby.

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Doepke and Kindermann discovered that in 25 to 50 per cent of couples, where at least one partner wanted a baby, the other did not. This was especially true for couples that already had at least one child. Appropriately enough, a woman's opinion mattered most to the actual outcome.

The economists found the biggest determinant of fertility was the distribution of the burden of childcare between mothers and fathers. Unsurprisingly, in countries where mothers bear most of the burden of child rearing, women are much more unlikely to want another child. Those nations also had the lowest fertility rates.

Doepke and Kindermann conclude that policies that "lower the childcare burden specifically for mothers" can be more than twice as effective at increasing the fertility rate compared with a general child subsidy. That means cheap, accessible childcare is a game changer because it helps mothers go back to work and not forgo wages by staying at home.

Australia's demographic destiny hasn't changed much since Costello's warnings in 2004. We've already reached a demographic milestone where the number of people aged over 65 in many regions is beginning to surpass the number aged under-15 for the first time. By the middle of this century about one in four Australians will be aged over 65. If these trends are coupled with a declining fertility rate, Australia's economic growth prospects will be weakened by a stagnant or dwindling population. That will make it harder to maintain the social services needed by an ageing population.

The research by Doepke and Kindermann is more evidence that Australia must improve its childcare system.

The centrepiece of last year's federal budget was a $3.5 billion increase to childcare support over five years from mid-2017. But I doubt that will be enough to make much difference to the birth rate. To do that, Australia's childcare system will require a complete overhaul, not more tinkering.

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