Why Aussies can't afford to have children


My god-daughter and her partner have decided not to have kids.

In their early 30s, they have a long list of reasons why babies aren't on their radar.

"Maybe she'll change her mind further down the track," I say to her mother, who has one child and would love to be a grandmother.

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She shook her head: "No, they have made up their minds."

Everyone has their own reasons for having or not having children. It is no secret that the cost and logistics of raising a family can be overwhelming. It is a huge, life-changing commitment and often the joy that children can bring to your life gets left behind.

The baby drought

The birth rate is dropping in Australia, with some experts calling it a baby drought. The 2022 fertility rate was 1.70 babies per woman. This is less than half the 1961 boom fertility rate of 3.55. As recently as 2008, the rate was 2.02.

The history of fertility loosely tracks economic prosperity. From a pre-contraception low of 2.17 in 1933, it climbed steadily to a peak in the early 1960s following the post-war recovery, before adjusting to a much lower level in the 1970s as contraception became widely available.

More recently, it rose significantly from 1.71 in 2001 to 2.02 in 2008 before falling to its current level. The 0.30 fall since 2008 has coincided with the explosion of housing prices. Australia needs around 50,000 more migrants each year to offset a reduction in the fertility rate from 2.0 to 1.7 births.

Aggregate economic growth and corporate profitability depend on population growth, so lower fertility influences immigration policy. It also creates budgetary pressures, as it ultimately drives a heavier age dependency ratio over time as the population matures.

Older first-time mothers

One of my kids wants to have a baby but also wants a well-paid, established career and enough savings for a home deposit by then.

Her age to start a family keeps creeping higher. It is currently 33, up from 32 last year; a few years ago it was 30. Peak fertility for women is late teenage years to early and mid-20s.

Around 53% of first-time mothers in Australia are aged 30 and older. Thirty years ago, it was uncommon for women older than 35 to have children, yet these days 17% of first-time mothers are aged 35 and older.

My daughter knows that putting off having a baby until her mid-thirties could mean she has fertility issues, so she wants to have tests to check the health of her reproductive system, as does her partner.

There isn't much that parents can do when their adult kids tell them that they aren't going to have babies.

Parents may be able to offer financial support to help them get into the housing market, and free childcare when the baby comes along. But parents can't do much about guaranteeing ongoing secure work that keeps up with inflation or fixing the accelerating gloom about climate change.

Having kids is a leap of faith that things will turn out for the best. This isn't easy with many young people struggling to keep their heads above water.

Financial pressures of raising children

Adding children to the mix means more financial pressures, such as time out of the workforce, medical expenses, the cost of childcare, the need for a bigger home and secure and flexible work.

It is taking the three million Australians with higher education debt on average 9.5 years to pay off their student loan, and with the interest rate on HELP debt ballooning to 7.1% this year, many younger families will be paying it off well into their 30s.

Climate change is also influencing decisions about starting a family. Young adults are gloomy about the future. One of my adult kids fears the planet will end in 70 years at its current rate of warming.

The University of Sydney's Gender Equality in Working Life Research Initiative found that the influence of climate on family plans varies depending on age, with younger people more concerned about extreme weather events, in particular.

While 31% of 31- to 40-year-olds said climate change has a 'great deal' or a 'fair amount' of influence on how many children they expect to have, it jumped to 43% of 18- to 30-year-olds.

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Housing costs take a toll on fertility

Just how much children cost depends on your income, according to the Australian Institute of Family Studies. People on higher incomes spend more on their kids.

Around 70% of women say the cost of housing influences their decision to have children, according to a survey of workers aged under 40 by Sydney University's Gender Equality in Working Life Research Initiative group.

Young adults face housing uncertainty, with low vacancy rates and rents rising faster than their wages.

Adult kids are staying in the family home longer. In 2021 (a Covid year), 69% of 15- to 24-year-olds were living in the family home either as a dependent student or a non-dependent child - this is 5% more than in 2011, according to the Census.

If young adults do buy a property - often with the help of the Bank of Mum and Dad - mortgage rates have more than doubled over the past two years from 3% to 6.2%.

According to the Australian Housing and Urban Research Institute (AHURI), 40% of early career adults aged 25 to 34 surveyed in Sydney and Perth expect family assistance to be able 
buy a house.

To get a toehold in the property market, first homebuyers are choosing smaller properties, one-bedroom apartments instead of two and locations further away from their family, social and economic networks, according to the AHURI. This means that grandparents can't mind their grandkids so easily because of the distances.

Also, couples are thinking hard about a second child, with single-child families doubling in the past 35 years, making up 15% of all families. But, at 40%, two-child families are still the most popular.

Home ownership falling

The rate of home ownership is dropping, with around 41% of 25- to 34-year-olds buying a property in 2021, down from 51% in 2001. It takes 14 years for a person on a median income to save a home deposit, up from eight years in 2001.

Without access to intergenerational wealth, the path to owning a home isn't open to many people who are renters or from non-wealthy backgrounds, according to the AHURI.

There are some direct grants and tax concessions to help first homeowners. Some are for newly built or substantially renovated homes. They all have an upper limit on the value of the home. The Federal government's First Home Guarantee Scheme helps people who meet the eligibility criteria with 
a 5% deposit.

You can use $50,000 of voluntary contributions in your super fund to buy your first home as part of the First Home Super Saver scheme. Check that your fund offers this and, if it doesn't, you can switch to a fund that does.

The voluntary contributions must be within the existing cap of $27,500 a year for concessional amounts.

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Susan has been a finance journalist for more than 30 years, beginning at the Australian Financial Review before moving to the Sydney Morning Herald. She edited a superannuation magazine, Superfunds, for the Association of Superannuation Funds of Australia, and writes regularly on superannuation and managed funds. She's also author of the best-selling book Women and Money.
Alan Hosking
November 11, 2023 8.43am

I think it's good that we're not having kids. We need to look at population growth sustainably, climate change is happening because there are too many people on the planet! We need to stop always looking at things like this in a financial way.