Fertility in free fall: The new data ECEC needs to note

The cost of living pressures being experienced in Australia are having a flow on effect to the nation’s fertility rate, with KPMG Australia warning of ‘a baby recession.’ 

 

Recent analysis conducted by the firm shows births across the country have fallen by 4.6 percent year on year, with the number of births in 2023 the lowest since 2006 as cost-of-living pressures impact the feasibility of younger Australians to have children. 

 

While there was a ‘post lockdown spike’ in the birth rate, with 315,200 babies born in 2021, by 2023 there were just 289,100 babies born in Australia, something worth noting by the approved providers of early childhood education and care (ECEC). 

 

Weak economic growth has historically led to reduced birth rates, KPMG Urban Economist Terry Rawnsley explained, however the current cost-of-living pressures “are having a particularly strong impact.”

 

“Birth rates provide insight into long-term population growth as well as the current confidence of Australian families,” he explained.

 

“We haven’t seen such a sharp drop in births in Australia since the period of economic stagflation in the 1970s, which coincided with the initial widespread adoption of the contraceptive pill.”

 

The COVID-19 lockdowns created a climate of uncertainty, where people delayed having children, however once the lockdowns were lifted, the record low unemployment rate and the stimulus money that flowed into the economy provided encouragement for people to start having children again, Mr Rawnsley continued. 

 

“With the current rise in living expenses applying pressure on household finances, many Australians have decided to delay starting or expanding their families. This combination of the pandemic and rapid economic changes explains the spike and subsequent sharp decline in birth rates we have observed over the past four years.”

 

“This is against the backdrop of a long-term decline in the total fertility rate, which has declined from over 2 children per woman in 2008 to 1.6 in 2023,” he added. 

 

Approved providers in Sydney will be most aware of this effect, with the decline in births shifting downwards by 8.6 per cent since 2019. 

 

Melbourne births are down 7.3 per cent, Perth 6 per cent, and Brisbane 4.3 per cent. 

 

Canberra is the nation’s only holdout, with no drop since 2019, holding steady at 5,530 in both 2019 and 2023, while Tasmania has experienced a notable increase in births, compared with 2019 figures, rising by 2.1 per cent.

 

“CPI growth in Canberra has been slightly subdued compared to that in other major cities, and the economic outlook has remained strong,” Mr Rawnsley explained. 

 

“This means families have not been hurting as much as those in other capital cities, and in turn, we’ve seen a stabilisation of births in the ACT.”   

 

Regional areas are faring better than cities, with only modest declines in births compared with 2019. 

 

Commenting on the findings, University of Western Australia Social Scientist Amanda Davies says infrastructure, as well as housing, could discourage couples from having babies in the inner city.

 

“When you’re starting off and you’re starting to buy a new home and set up your family, the inner city is not the target space for that,” Professor Davies shared with ABC Radio Perth.

 

The Professor believes this latest analysis should be seen as a “canary in the coal mine” warning sign.

 

“Fertility rate is a real indicator of the accumulation of the impacts that the cost of living and the housing shortage is actually having on the population,” she said.

 

“Is it OK that this generation feels under such pressure that they either are choosing not to have children, or they’re choosing to only have one or two children, because it’s no longer a choice to have (just) one income in a household?” she said.

 

“Maybe it’s something to have a look at and think, ‘is the structure of our social supports OK and how can we enable people to have families?’”

 

Mr Rawnsley believes it will take some time for the birth rates to increase again across the board. 

 

“It wouldn’t be a surprise if next year we see a very weak number, and the year after that,” he said.

 

“It will probably take time for households to regain that confidence, repair their balance sheets so they feel that they can get out there and start a family.”

 

To access the KPMG data please see here. The ABC coverage referenced in this story is available here.