The baby bonus generation is starting to turn 18. Has it saved Australia’s population?

In May 2004, then-treasurer Peter Costello, under pressure to find a way to push up Australia’s falling birthrate, announced his foray into the country’s bedrooms with a slogan remembered by a generation: “Have one for Mum, one for Dad, and one for the country.”

It was an off-the-cuff remark made while facing questions over a new policy: the baby bonus, a $3000 lump sum payment to new parents, the combination of two complex and little-used tax offsets.

Peter Costello’s baby bonus policy gave families a lump sum payment of $3000 for every child born from July 1, 2004.Credit:Sandy Scheltema

This week, as the calendar flipped to July 1, the children of the most significant demographic policy shift since World War II began turning 18. They represented a short-term mild uptick in the number of births in Australia at the time.

Speaking to The Sun-Herald, Costello (now chairman of Nine, owner of this masthead), said he did not believe the payments influenced families to have children if they did not already intend to.

“I don’t think it was the payments [that was responsible for the bump in births] as much as the fact that we were talking about the need to increase the number of young people to balance off the ageing population,” he said. “I think it was that debate that it started.”

At the time the policy was announced, the fertility rate – which records the average number of live births per woman – was about 1.7 and was starting to drop to just short of 1.6.

Australia needs a rate of 2.1 for the population to remain steady without immigration.

In 2004 that rate grew to 1.78, and steadily increased to a 32-year high of 2.02 babies born per woman in 2008.

The most recent data, from 2020, has the rate at 1.58 – lower than when the policy was first introduced.

“As a society, we’ve got to understand this point: we’re living longer and having fewer children. This means there just aren’t going to be enough people to look after us all in the hospitals and in the aged care centres,” Costello said.

“The way we’ve coped in Australia is that we bring in immigrants to do that, to cover the labor shortages… You can do that for a while but if you have COVID or wars or whatever, your flow of immigrants can be halted. And that’s why it’s better to maintain your own stable population rather than have a diminished natural population.”

Demographer Mark McCrindle said the initial bump after the baby bonus’ introduction was “a significant increase”.

“It was just a declining trend, and then this policy [was implemented], and then the very next year [there was] an increasing trend, which was sustained.”

Before the bonus, McCrindle said the birthrate was forecast to fall below 1.5, a similar trend that was also seen in other developed countries.

But Dr Liz Allen, a demographer and social researcher at the Australian National University, said the uptick was the result of “socio-demographic circumstances” rather than government intervention.

“We had an age structure that meant there was a particular spread of women in their reproductive ages that saw births increase,” she said. “So in other words, it was going to happen anyway.”

But McCrindle said the baby bonus had another impact: the policy, and its slogan, sent a message that “babies are welcome and that it’s helpful for society”, a counter-cultural narrative in the early 2000s when concerns about overpopulation were front of mind.

“I think that had the impact on the social mores, the social values and communications around family and children, rather than just the money itself,” said McCrindle.

That was one of the factors that encouraged Sydney mother Lynh Mai to have Nicholas Nguyen, the third of four children, in the months after the government’s announcement.

Nicholas Nguyen, almost 18, was born after the Howard government’s baby bonus payment was announced.Credit:Flavio Brancaleone/supplied

After he was born in early 2005, the $3000 lump sum payment was helpful support.

“It felt like the cherry on the cake,” she said. “For us, it was great.”

In hindsight, as a mother working in a bank that then only provided six weeks’ maternity leave, Mai said she would have preferred cheaper childcare that helped her balance work and care.

“We were hesitant to have more kids because of the cost of childcare and the cost of support,” she said.

Alan said the government’s investment in these costs at the time would have been a more effective way of sustaining a higher fertility rate, given the goal of pro-natalist policies is the removal of barriers that prevent families from having children.

She said there were four main barriers that restrict people from having children today: gender equality issues, including access to childcare, the affordability of family-friendly housing, concerns over climate change, and a lack of secure employment.

“Australians are not having their desired number of children,” Alan said. “People are not realising their families because policy gets in the way.

“In my mind, that is a significant policy failure.”

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