Nappy Families - Peter McDonald

The Federal budget has announced large increases in family payments and changes in the structure of the payments that will enable a better combination of work and family. Excellent news for families trying to meet the costs of everyday life, but do the changes have any implications for the birth rate and, hence, for the issues that arise from Australia’s ageing population?

In the early 1980s, the birth rate in most Western European countries was around 1.7 children per woman, about the same level as Australia has today. Since that time, governments in the Nordic countries and France and the Netherlands have introduced a range of family policies that have supported the combination of work and family. The effect has been that these countries continue to experience birth rates around 1.7 children per woman while the birth rate in the countries of Southern Europe and the German-speaking countries have fallen to levels around or below 1.3 births per woman that can only be described as precariously low. On present trends, over the next 50 years, Japan is facing a fall in the size of its labour force of around 20 million workers, Germany of 12 million, Italy of 9 million and Spain of 7 million. At the same time, the old aged populations in these countries will be growing rapidly.

All countries in the world with a birth rate below 1.5 births per woman have indicated when surveyed by the United Nations that they consider their birth rate to be too low and most are now, belatedly, opting for the family policy directions that the Nordic countries and France introduced progressively over the past 20 years. However, no country as yet has succeeded in raising its birth rate above 1.5 when it had fallen below this level. This may still happen, but the evidence is that it is prudent to reform family support policy when the birth rate is still at a moderately high level. I have argued very strongly in favour of this policy direction in Australia and so I welcome the very positive changes that the Australian Government has made. It is not that we need more babies in Australia; we simply need to maintain the number around its present level.

What more can be done? There is little more to be done in the area of family payments, although we may need to consider further changes to Family Tax Benefit Part B (the former one-income family payment that now can be received by more secondary earners working part-time). While this benefit is now lost more slowing as mothers increase their labour force participation, it is still lost. I would prefer to see this payment redistributed more towards families with children at the younger ages (ages 1 and 2 in particular) and away from those with teenage children whose mothers are able to work without incurring child care expenses and to those with low and middle income levels and away from those with partners earning high incomes. At present, Family Tax Benefit Part B is paid to over 100,000 one-income families earning more than $85,000 per annum.

However, encouragement of part-time work among parents with young children has two other implications. To be consistent, the Government also needs to ensure that parents returning to work after parental leave have a right to work part-time in their own job. If employers are able to say ‘ you can either work full-time or not at all’, then there will be an inconsistency with the family payments initiatives. There is a test case before the Australian Industrial Relations Commission later this year in which a right of return to part-time work after parental leave is being sought by the ACTU. If the Government is consistent, it will support this claim. Furthermore, for many parents with children aged less than school age, access to centre-based child care is a prerequisite for part-time work. This is another problem area that the Government must address if it is to be consistent in its approach. I have called for a reform of early childhood education and care in Australia that would see an end to the inefficient parallel system of preschool education funded by the States and child care funded by the Commonwealth. This cannot be done in a budget or even at an election because complex negotiations between governments, providers, workers and parents are required. Nevertheless, for the coming election, I would like to see the political parties competing over what they will do about this issue in the term of the next parliament.

With these approaches to families, continued immigration and policies to maintain the attachment of workers at older ages to the labour force, Australia will be extremely well placed compared to its competitors to deal with the issues of an ageing population.