Treasurer Josh Frydenberg was quick to encourage Australian couples to head to the bedroom for the sake of the economy in last week's National Press Club address, harking back to Treasurer Peter Costello's comment in 2002 exhorting Australians to have "one for mum, one for dad and one for the country". But Mr Frydenberg stopped short of advocating a return to Costello's 'Baby Bonus' scheme, perhaps for good reason.
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The Australian Baby Bonus, which ran in various forms from 2002 to 2014, provided a financial incentive for couples to have children but may have had unintended consequences. Rather than driving a long-term increase in the national fertility rate, women appear to have merely brought births forward to take advantage of the financial cash payment. Australia's national fertility rate was 1.76 in 2002, rising to 1.96 in 2007 prior to the Global Financial Crisis, only to have fallen since.
This meant many women may have had children earlier in their career than desirable. In some cases, they may have sacrificed career opportunities and income that may have amounted to much more than the Baby Bonus payment.
Instead of splurging on a "cash-for-kids" policy, the best thing government could do to encourage people to have children is to address the economic opportunity cost of having children, especially for women. Even before COVID-19 our research showed young working parents were struggling to have both children and careers, with the future looking very much like just one child per family, by necessity.
Contrary to popular belief, the more women in paid employment, the higher the nation's fertility rate in developed nations. Countries that have more women working, have more babies. Sweden, Norway, and Finland have high rates of female employment and high fertility rates of roughly two children per woman. Spain, Italy, Japan and South Korea all have very low fertility rates, at around one child per woman, and very low levels of female employment.
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Why is this so? Nations that strike the balance between boosting women's paid employment and men's roles as parents, get more of everything: more people in work, more babies and higher GDPs - a "win-win" all round.
The federal government should aim for policies that centre around making early childhood care and education more affordable and accessible for couples, as well as policies that offer secure and flexible work. Not only do these policies ease the burden on families when having children, they increase women's attachment to the labour force over the life course, thus also improving their economic position in older age. Furthermore, good childcare also increases the likelihood of families deciding to have a second or third child.
Government support for early childhood education and care encourages more women into paid employment. This generates higher levels of government tax revenue, while also enabling families to have children without herculean effort.
Rather than just "shovel-ready", hard infrastructure investment, social infrastructure-focused investments make profound economic and social sense. Recent analysis by the Australia Institute shows every $1 million spent on new construction creates only 0.2 direct jobs for women, whereas $1 million spent on education creates 10.6 jobs.
With the announcement of a record $850 billion of gross debt forecast for next year and record unemployment, social infrastructure is something the treasurer should be keen to pursue. Babies and work do go together, but only with the right policy recipe.
- Marian Baird is a professor of gender and employment relations, and Daniel Dinale is a PhD candidate at the University of Sydney Business School.
