View Full Version : Australia's 'Productivity Commission' Claims Babies a Drag on Economy

Thursday, August 7th, 2008, 01:39 PM

FORGET those plans to have a third child for the country because further increases in the birth rate could harm the economy, the nation's productivity watchdog has warned.

A major analysis of the nation's increasing fertility rate said it was at its highest level for 25 years - but the Productivity Commission yesterday warned further increases may aggravate rather than solve the problem of the ageing of the population.

This is because it will shift women out of the workforce while they care for babies, depressing labour supply and reducing the taxation base as our population ages, the Daily Telegraph reported.

The small number of extra babies born would make little difference to the rate of population ageing, the commission said.

And the women having the babies would be exacerbating the financial impacts on the government of the ageing of the population because the tax breaks offered to parents to have children occur up front, while the cost savings of a bigger working population and bigger tax base from extra children are deferred until they are of working age.

The commission's views were of particular interest as next month it is expected to hand down a much anticipated report into whether the nation should adopt a paid maternity leave scheme.

It found the $5000 baby bonus, which is expected to be rolled into any new paid maternity leave scheme, had had only a partial role in lifting the fertility rate.

The baby bonus represented only a 1 per cent reduction in the lifetime costs of a first child, which would cost its parents at least $385,000 over its lifetime.

"Any significant fertility effect from the bonus would suggest the presence of short-sightedness by parents about the lifetime costs of raising children," the report said.

The commission said the Family Tax Benefit payments, averaging around $5000 per family per year, were more likely to have had a bigger impact on lifting the national fertility rate.

These payments cut the cost of children by 8 per cent a year and the generosity of these benefits increased significantly after 2000.

More than 285,000 births were registered last year, the highest level in 25 years.

The commission said this was mainly a catch-up effect as women deferred childbirth to later in life.

"Having reached older ages, they are now having these postponed babies," it said.

The fertility rate would be even higher but for the effects of high house prices and better educated women, the commission said.

More highly educated women can earn good money if they work rather than stay at home to care for children and this had depressed the birth rate.

The higher cost of housing meant it took longer to afford a house, which has delayed child-bearing.

Problems with this "productivity watchdog's" report:

The whole article seems extremely short sighted, sacrificing long term stability in return for squeezing a few more years in the workplace out of middle aged women, as does the analysis regarding tax breaks for children who will not enter the workforce until years later.

A policy based in part on forcing people into taxable activities (more years in the workplace) than in untaxable activities (stay at home mothers) disregards overall economic health, measured in terms of benefits to individuals and families, rather than amount of taxed wealth the government is able to control.

They specifically discourage 'having a third child' because it will remove women from the workplace, yet based on my anecdotal observations it seems women are not much more likely to leave the workplace to care for 3 children than 2.

Either this Australian 'productivity watchdog' is staffed by complete morons, or they have some other agenda at hand, perhaps a desire to obtain the next generation of workers from someplace other than Australia.