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Birth rate in Australia: should it concern the government?

   It is to note that Australian birth rate is about 1.7 births per women and compared with other well developed countries it is considered low. Low birth rate has influences on various areas of people’s life such as economy, population demographic and overall sustainability of the society. One of the major implications of birth rate decline is the development of a negative workplace dependency ratio. This is the ratio of those in the workforce to those not in the workforce. A decreasing birth rate means that the percentage of younger people or those of workforce age (20 – 64) declines, as the percentage of the population of non-workforce age (65+) continues to increase (Barnes, 2001: p.4). This would be a significant change in Australia in the future as “until now, the decline in youth and increase in the aged have been in balance…”(Barnes, 2001: p.5) and therefore current policies may not be designed to suit these kinds of shifts in population, for example, aged pensions, the healthcare system and concessions.

   Another significant effect of a declining birth rate is a reduced workforce which can equal decreased productivity for a nation. “A decrease in the size of the workforce will reduce the capacity of the economy to maintain rates of output growth…”(Barnesn 2001: p.14) which in turn puts pressure on the existing workforce to increase productivity and performance. A smaller workforce also means a smaller tax base which in turn can place further pressure on the social security system; less people of working age means less revenue collected by the government in taxes to support a proportionately large aged population.

   Each of these effects – a negative workplace dependency ratio and a reduced workforce – points to the growth of the aged population. A falling fertility rate accompanied by increasing longevity and a low aged mortality means that the proportion of older groups in society is growing. This is a widely publicised issue in most developed countries and can have significant impact on the economy and social support systems. As the aged population increases, so too does the need for increased spending on areas such as aged care, health and income support, especially in societies where the working age population is not encouraged to prepare or save for their retirement. (Anon, 2002: p.3) This can prove to be a significant drain on resources and the general economy. “…As the population aged 65 and over increases in size, associated social expenditures on income support, care and health services can be expected to increase.”(Anon, 2002: p.5)

   A declining fertility rate also affects the social structure of a nation. As less and less people are having families, social networks are affected and support within the family unit changes. Where previously children may have provided a support network for their parents, in many cases, older, childless Australians may turn to the government to assist in providing this network. (Anon, 2002: p.3) With an increase in the number of one to two person households with steady income which is often relatively high, standards of living increase for these households, where standards for families with dependants may struggle to keep up. This will then lead to even further decreases in birth rates as couples postpone having a family based on their financial circumstances. “The greater the apparent difference in the standard of living of the childless family… and the family with no children… the greater will be the pressure on young couples to postpone reproduction.” (Campbell, 1987: p.137) This in turn will further affect the declining birth rate and further exacerbate the associated implications.

   How do these implications relate to Australia?

At Australia’s current TFR of approximately 1.7 births per woman, the population is expected to grow to approximately 25.4 million people by the year 2051 with approximately 25 per cent of the population aged 65 and over, and the population aged between 15 and 64 at approximately 60 per cent. Based on these figures, assuming the TFR does not decline further, the relatively low birth rate should not be a crisis as the changes in population structure associated with this low TFR will occur slowly, allowing time for adjustment in government policy and spending. If the government effectively plans for these gradual changes, then Australia should be able to adapt and still progress into the future. “…Changes will be gradual and steady and at current levels, our fertility rate does not represent a crisis.” (Barnes, 2001: p.v)

   These figures do certainly indicate a rise in the aged population and a shrinking workforce however opinion is divided over the impact of these factors on a population at the level predicted. It is widely publicised in Australia, the growing burden the aged continue to place on society, but rarely are any positive effects mentioned. Older Australians contribute positively to society in many ways including through volunteer work and through assisting younger Australian’s and families with childcare. “A largely healthy, active older population could make a valuable contribution…” (Anon, 1999: p.7) The aged population also still requires provision of goods and services which in turn generates growth in jobs and the economy. In Australia, especially with the increased focus on the importance of superannuation, many Australians are self-funded retirees and indeed it is even thought that an aged society is less of a drain on the economy than a younger one. “Most old[er] people… will be financially supported directly out of funds they have paid during their years of paid earning… [whereas] the economic dependency of children… for food, clothing, health care, [and] education is essentially total… and their contribution nil.” (Day, 1992: p.105)

   An apparently declining size in the workforce may also be offset by larger numbers of women entering the workforce, as they are less involved in raising children. Currently, proportions of women involved in the workforce are relatively low and therefore scope for growth may offset the problems of apparent workforce decline. If “labour force participation rates for women mover…a 34 per cent increase in labour supply… without any increase in the total population size” (Khoo, 2003: p.276) could conceivably occur. This would obviously have policy implications as women with families choosing to work would require increased levels of support and assistance to raise their families. With well designed planning by the government, this should be catered for to ensure women are supported, thus increasing labour force participation.

   The major issue for Australia will be if the birth rate continues to decline. The ABS predicts that should the TFR drop as low as 1.3 births per woman (which is potentially conceivable), there would be serious ramifications for Australia’s population. At a rate of 1.3 births per woman, “…the rate of natural increase (the excess of births over deaths) would eventually decline… Australia’s economic growth and position… would be severely weakened by a smaller and declining population.” (Barnes, 2001: p.VI) Even increasing immigration levels which can offset a declining birth rate would not prevent a severe population decline from occurring, which can then be extremely difficult to reverse.

   A birth rate this low would also mean an even more pronounced increase in the aged population and decrease the size of the workforce even more significantly. With a TFR of 1.3 by the year 2051, the proportion of people aged over 65 would be approximately 30 per cent, with the workforce only at 59 per cent. (Anon, 2002: p.7) This would continue to be critical as less and less children are born and therefore another 50 years would bring the population into serious decline, as births would no where nearly be replacing deaths. This would place enormous pressures on the social security system as “low fertility leads to a problem of demographic sustainability” (Khoo, 2003: p.277) such as is being seen in some European countries today. A birth rate this low would lead to an ‘unsustainable’ future for Australia. (Khoo, 2003: p.277).

   The Australian Bureau of Statistics puts Australia’s current replacement fertility at 2.1 births per woman and many consider this to be an optimum level of fertility for Australia’s sustainability. At a TFR of 2.1, Australia’s population would reach over 40 million people by the year 2050 (Anon 1999, p. 4) with only 22 per cent of the population aged over 65. Whilst many would consider this to be an ideal situation, it is both unrealistic and potentially hazardous to Australia to have such a large population. Firstly, the trend since the 1970’s has been fertility decline and with rates over 2.0 not occurring since the baby boom of the 1940’s and 1950’s, the likelihood of Australia’s fertility rising to this level is extremely small. Even if it were a possibility, would this be an ideal situation in a country like Australia of which such a large amount of land in uninhabitable and resources are precious. Could Australia support such a large population? “…The size of the resulting population would cause serious environmental degradation and that this rate of growth should be avoided in the interests of sustainability.” (Anon, 1999: p.5) This TFR would potentially lead to Australia high birth rate then being a matter of concern and is therefore certainly not the ideal. Australia’s current birth rate would be a preferable scenario.

Summary

Australia’s low birth rate is potentially not a matter of great concern provided that government policy and decision making is guided by the needs of the future increased ageing population that will occur as a result of the fertility rate. It is also essential that the birth rate does not drop to points so low that population decline occurs as that would have serious ramifications for society and future policy direction. (Barnes, 2001: p.VI) Australia certainly has issues to face with the current TFR such as an increasing aged population and declining workforce, however sensible policy making and clear planning will alleviate most of the problems associated with these issues. The low birth rate should be a matter of concern in that it needs to be monitored and managed effectively to ensure Australia’s continued growth. It should not however be considered a crisis or irreversible in any way if maintained at the current level.

Bibliography
Anon., 2002, Australian Social Trends 2002. Population – Population Projections: Fertility Futures, http://www.abs.gov.au/Austats/abs@.nsf
Anon., 2002, Ageing in Australian Society, http://www.ageing.health.gov.au/ofoa/agepolicy/ageinaust/aiasbk2.htm
Anon., 1999, Australian Social Trends 1999. Population – Population Projections: Our Ageing Population. http://www.abs.gov.au/Ausstats/abs@.nsf
Barnes, Allison. 2001, Low Fertility: A Discussion Paper, Department of Family and Community Services, Canberra.
Campbell, Arthur A. (Editor), 1980: Social, Economic and Health Aspects of Low Fertility, U.S. Government Printing Office, Washington.
Day, Lincoln H., 1992: The Future of Low Birthrate Populations, Routledge, London.
Khoo, Siew-Ean and McDonald, Peter., 2003: The Transformation of Australia’s Population 1970 – 2030, University of NSW Press, Sydney.

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