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Thursday, 16 May 2013

The Baby Bonus Generation: McCrindle Research. Interview with Mark McCrindle

In a term coined by Australian research company McCrindle Research, 'The Baby Bonus Generation' is coming to an end.

With the budget announcement on Tuesday including an end date to the Baby Bonus payment to parents of newborns, it also effectively means the end of the Baby Bonus Generation (which stands at 3.1 million people since 2002, and growing).

Image: McCrindle Research
The Baby Bonus was introduced in the year after Australia’s population hit its lowest birth rate ever recorded (1.7) in 2001, with the aim to increase fertility rates and offset the peak of Australia’s ageing population.

The 2002 Federal Budget, delivered by Treasurer Peter Costello introduced the baby bonus scheme, aimed to lighten the financial load for new parents. The Baby Bonus Scheme initially granted $2,500 in tax cuts per year for parents of newborns, an amount which was amended to lump-sum payments of $3,000 from 1 July 2004 and progressively rising to its current amount of $5,000 (now paid in 13 instalments).

Mark McCrindle from McCrindle Research answered some questions for Josie's Juice on the Baby Bonus Generation.

First, I asked him about the much-talked about assumption that a baby bonus payment would have a slew of young mums falling pregnant, and buying flat screen TVs (always the common reference people make about where the benefit would be misspent).

"The evidence clearly shows that it’s a myth that the baby bonus encouraged more young mums. The fertility growth during the existence of the baby bonus has been most notable in older women, not younger ones," Mark told Josie's Juice.

Indeed, as McCrindle Research has shown, there are some misconceptions about the baby bonus and the births that it facilitated.

When the 2002 Baby Bonus was first introduced, it was predicted by some that the incentive would encourage an increase in teenage, single and young mums. However, the ABS data shows that the fertility rate for mums aged between 16 and 19 has actually declined over the last decade. In fact, the fertility rate for teenagers has been declining for more than three decades now – for example, the fertility rate of sixteen year old women has decreased 55% since 1982.

The baby bonus certainly had an influence on the birth rate, which increased significantly, hitting a peak of 2.0 in 2008. Births continued to grow, and 2011 saw Australian births exceed 300,000 (301,617), a record that is being broken year on year. In fact, we are amidst a bigger baby boom than even the original post-WWII baby boom incurred, which resulted in Australia’s largest-ever generation – the Baby Boomers.

The Baby Bonuses (the 3.1 million babies born since the introduction of the Baby Bonus Scheme in 2012) are Australia’s first generation paid simply for being born. The Baby Bonus and the resulting surge in births over the last decade has eased the peak of the ageing population challenge and added to our population growth and the economic stimulus that has flowed from this.

Says McCrindle Research: the trend over the last decade has been increasing fertility rate amongst older women. Over the last decade, the fertility rate of women aged 35-39 has been greater than that of women in their early twenties. The fertility rate of a 32 year old woman is ten times greater than that of a 17 year old!

On 1 March 2014, when the Baby Bonus Scheme is finally put to bed after more than 13 years and replaced changes to Family Tax Benefit Schedule A, it will have left a legacy in terms of the generation it created. The economic impact and productivity of the Baby Bonus Generation will shape this nation over the century ahead, says McCrindle Research.

With just over nine months to go until its dissolution, there’s still time for prospective parents to gain a benefit from the Baby Bonus Scheme. According to McCrindle Research, we may well see a final surge of births that end this legacy of Australia’s baby bonus and the Baby Bonus Generation.

And finally, I ask Mark what he makes of childless people who say we should not be paying a bonus or benefit of any description to mothers?



"Clearly having a child is a couple’s choice and they have to bear the responsibility and the bulk of the cost of that. Children do, however, create a significant economic stimulus: they create lifelong demand for goods and services, they create an entire work-life’s worth of contribution for the labour force and they have helped slow the worst of the ageing population trajectory on which Australia found itself.  Raising children is increasingly expensive, therefore, if families get modest financial support from the state to which their children will generously contribute, then this is a reasonable exchange," Mark told Josie's Juice.

What are your thoughts on this topic?

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