Of course we have a baby drought. Here's how to address it

If somehow you managed to avoid the news this week, here it is in short: Australians are having fewer babies than we used to. Gone are the days when the average Australian family was at least two kids. Now we aren't making enough babies to replace ourselves.

In 2008, the average was two babies per woman. Now it's about 1.63. The Canberra Times this week reported rising housing costs have been linked to Australia's "baby recession" and declining fertility rate. The number of births in 2023 dropped to 289,100, the lowest annual total since 2006, analysis from KPMG Australia revealed.

Now when I say Australians, I mean most of Australia. Two places are more or less immune from this - Canberra and Tasmania. And at least one person is not even convinced about the reasons Tasmania has experienced an increase in births.

Workforce demographer and adjunct associate professor at the University of Tasmania Lisa Denny, an actual Tasmanian living in Tasmania, is not too impressed with the KPMG report. She studies her local environment. There is, she says, no way Tasmanian women are immune to the pressures of life right now.

Economists don't really get it, she says: "The decision to have a child is not just about the economic cost but also about the opportunity cost."

What Denny means is when we think about having babies, we don't just think about our immediate financial needs - we also think about what's going to happen to our lives, our jobs, our superannuation.

"There's a broader picture about how we make those decisions ... we have changed and recalibrated [here in Tasmania]," she said.

What does she want governments to do?

"Every policy made in Australia in a region will have a demographic impact. As we develop new policies, we should have a demographic impact assessment," she said.

Matt Grudnoff, senior economist at The Australia Institute, has two kids he adores. But there is no way he'd be having them now if he was starting out. He's 49 and is blunt about what he would do if he was in his 20s or 30s trying to start a family at this moment.

"I wouldn't want to have a kid and have to start looking for a house in the suburbs, rather than just somewhere with one bedroom," he says. Unaffordable.

A lot of our decisions are based on the context of our lives. When Kamala Harris spoke at the President's Advisory Commission on Advancing Educational Equity, Excellence, and Economic Opportunity for Hispanics last year, she said: "My mother used to - she would give us a hard time sometimes, and she would say to us, 'I don't know what's wrong with you young people. You think you just fell out of a coconut tree'?"

That's turned into a wild coconut tree virality but, as she put it at the time: "You exist in the context of all in which you live and what came before you." Coconuts don't fall far from the trees.

In July 1990, Australia entered the recession we had to have, and I remember writing a story talking about the increase in the number of abortions as the impacts of the wavering economy began to be felt. Women were wanting to have those babies but would recognise it was not possible in that particular context. And you can see what happened to the birth rate in Australia over that time. Between 1991 and 2001, only two years experienced growth in the number of babies - 1992 and 1999. The next decade was go-go-go.

Grudnoff says the government could improve the context. Here's how. One, it should reform the capital gains tax discount and negative gearing. I feel like we've all been singing from this songsheet for years, even well before the 2019 election Labor lost. But here's the key thing. If the government does this boldly, it would save billions. And guess how we could spend those billions? You got it - we could spend it on housing.

Two, change the national mindset. We have to stop thinking of housing as an investment and return to thinking of it as a public good, an essential good. As Grudnoff puts it: "We need to think of homes as a place of security where you raise a family."

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And three, he's pretty impressed with the work Labor has done on childcare reforms so far because it works. It's one of those areas which pays for itself in the long run and encourages people to come back into the workforce.

Let me point you to the places where it's babies gone wild, including one which surprised me. Take Gilgandra (NSW), where it's 3.38 babies per woman. Kingaroy (Queensland) 2.65. Cobblebank - Strathtulloh (Victoria) 2.57. Logan Central (Jim Chalmers's seat, also in Queensland) 2.51. Taylor (ACT) 2.51.

Grudnoff says mainly these are areas outside the capital cities. Folks who live there might have to commute to their jobs but they might also just have snuck into the housing market before it became out of control. The drop-off is less in regional areas, he said.

And I'm thinking back to the time when I had three kids under five, a massive mortgage, soaring interest rates and insecure work. That's like most of Australia now. No wonder the babies have dried up.

Demographer ANU's Liz Allen, mother of seven, says the government needs to fund a family-friendly society as if the future depends on it. And it does. "We cannot afford to keep doing what we are doing."