Australia’s falling birth rate raises stakes for families and the economy

CANBERRA — Australia is heading towards a future in which deaths outnumber births, according to Treasury projections that have intensified concerns about the nation’s ageing population, future workforce and the financial pressures confronting people who want children.

The 2026 Intergenerational Report projects that the country will cross that threshold in the 2060s. It also expects the number of Australians aged 85 and older to triple over the next four decades, increasing demand for health and aged care services as population growth slows.

The outlook brings together two challenges already shaping Australian life: younger adults struggling to establish financial security and an older population needing more support. Decisions made around household budgets, housing and employment are becoming increasingly consequential for the country’s economic future.

Treasury’s long-term fertility assumption has fallen sharply. Its latest report projects 1.34 births per woman by 2065–66, compared with the long-term assumption of 1.62 in the 2023 report. The Parliamentary Budget Office identifies delayed family formation and smaller families as central to that revision.

Australian Bureau of Statistics figures for 2024, the latest detailed annual birth release, put the total fertility rate at 1.481 births per woman, down from 1.499 in 2023 and 1.795 a decade earlier. There were 292,318 registered births in 2024, an increase of 1.9 per cent, even as the fertility rate declined.

The fertility rate summarises age-specific childbearing patterns in a particular year. It differs from the number of children a generation ultimately has. Australia has remained below the replacement benchmark of about 2.1 births per woman since 1976.

Recent research suggests that financial pressure is influencing decisions well before prospective parents reach the point of buying baby supplies or arranging childcare.

An AMP report released in October found that 53 per cent of respondents aged 20–29 had reduced their intended family size because of living costs. Forty-four per cent said they had delayed parenthood, while 48 per cent had reconsidered having children.

Housing featured prominently: 63 per cent of respondents in their 20s felt they needed to enter the property market before having children.

The findings came from research commissioned by AMP and conducted by Dynata in July 2026 among 2,000 Australians across different age groups and circumstances. They capture people’s reported intentions and financial concerns, rather than establishing how many children respondents will eventually have. AMP itself cautioned that family decisions involve relationships, careers, preferences and other circumstances alongside money.

Longer-running research shows that aspirations are changing too.

The University of Melbourne’s 2025 Household, Income and Labour Dynamics in Australia report, drawing on data through 2023, found that women’s average desired number of children had declined from 2.35 in 2005 to 2.09. For men, the figure fell from 2.22 to 1.99.

Two children remained the most commonly preferred family size, but more respondents wanted one child or none.

“Potential parents are growing more concerned about their financial security and the costs of raising a child,” report lead author Dr Inga Lass said.

The same research found that, after accounting for inflation, average household spending on childcare was 38.5 per cent higher in 2023 than in 2006, while spending on rent was 40.5 per cent higher. These changes help explain why family planning increasingly involves decisions about housing, working hours and financial resilience.

The shift towards later parenthood has developed over decades. Australian National University research published through the Centre for Population describes an extended transition into adulthood, with education, stable employment, independent living and home ownership increasingly reached at later ages.

The researchers stress that the relationship between education and fertility is complex. Longer study can postpone other milestones, while changes in employment, relationships and preferences also influence when people become parents.

For births registered in 2024, the median age of mothers was 32.1 and that of fathers was 33.9. Those figures cover all registered births, including children born to people who were already parents.

Delayed births can sometimes be followed by an increase in childbearing at older ages. The ANU projections allow for some of that recovery, particularly among women aged 35 and older. However, their central scenario does not expect later births to fully offset the broader decline.

The report also highlights uncertainty. Previous projections have missed both temporary recoveries and subsequent falls, reflecting the difficulty of anticipating economic conditions, social behaviour and policy changes over several decades.

For people considering parenthood, the financial calculation extends beyond the immediate cost of raising a child.

A peer-reviewed Australian study published in Economic Record in March 2025 estimated that becoming a parent reduced women’s annual earnings by an average of 53 per cent during the first five years. The researchers attributed the reduction to lower employment participation and fewer working hours, including movement into part-time work.

The estimate concerns annual earnings across the women studied, including time away from employment. It is not an equivalent reduction in the hourly pay of every mother.

The research also found that women with greater access to workplace flexibility were more likely to remain employed after having children. That makes the organisation of work an important part of the family-support debate: the consequences of parenthood can continue long after parental leave ends.

The federal government has expanded support during the early stages of parenthood.

For eligible families with children born or adopted from 1 July 2026, government-funded Parental Leave Pay increased to 130 days, equivalent to 26 weeks on a five-day working week. Where a claimant has a partner, 20 days are reserved for that partner.

Superannuation contributions also apply to Parental Leave Pay for eligible children born or adopted from 1 July 2025. The Australian Taxation Office pays a contribution of 12 per cent, with payments beginning from July 2026. These measures address both income during leave and retirement savings lost when parents step away from paid work.

Childcare assistance has also changed. Since 5 January 2026, all families eligible for the Child Care Subsidy have been entitled to at least 72 hours of subsidised care per fortnight under the Three Day Guarantee, regardless of their activity levels.

Families generally still pay a gap fee, and the entitlement does not guarantee an available place at a childcare service. The subsidy amount continues to depend on factors including household income, the type of care and the hourly rate cap. For parents trying to organise a return to work, affordability and the availability of a suitable place remain separate practical concerns.

The Productivity Commission’s 2024 childcare inquiry identified workforce shortages and gaps in service availability as major obstacles to universal access.

It recommended stronger training, mentoring and career pathways for educators, alongside investment in services in disadvantaged, regional and remote communities. It also warned that expanding access must preserve quality.

Those findings connect family policy with the workforce challenge facing Australia more broadly. Parents’ ability to participate in employment depends partly on having reliable care for their children. The commission expected more inclusive and accessible services to increase parental workforce participation while improving outcomes for children, particularly those experiencing disadvantage.

The declining birth rate has revived debate about financial incentives, including a return to a baby bonus. Treasurer Jim Chalmers has emphasised that decisions about whether and when to start a family are personal, while arguing that government should make those choices easier.

Finance Minister Katy Gallagher has pointed to childcare investment, longer paid parental leave, support for second parents taking leave and superannuation contributions as ways to reduce the economic impact of having children.

International evidence suggests that sustained support across several areas matters more than expecting one measure to reverse the trend.

The OECD’s analysis of fertility across advanced economies recommends helping parents combine employment and care, sharing household responsibilities more equally and addressing housing costs. It also warns that changing preferences mean even substantial family support is unlikely to restore replacement-level fertility.

Its findings place Australia within a wider shift towards fewer and later births. Governments can remove barriers for people who want children, but policy also needs to accommodate different family choices and prepare for persistently lower fertility.

Australia’s population is still projected to grow. The Intergenerational Report puts it at 39.3 million by 2065–66, with long-term net overseas migration assumed at 235,000 people annually. Once deaths exceed births, migration would account for population growth under those assumptions.

The economic challenge is the population’s changing composition. A larger share of older residents increases demand for services while changing the balance between people of working age and those beyond it. The Parliamentary Budget Office explains that slower population growth and faster ageing can increase spending pressures relative to the size of the economy.

Treasury nevertheless projects that Australia’s working-age population will continue growing modestly, giving it greater demographic resilience than many other advanced economies. Its outlook also anticipates longer, healthier lives and rising real income per person.

Productivity will therefore remain central to living standards. Investment in skills, infrastructure, technology and better ways of working can increase the goods and services produced without requiring an equivalent increase in workers. Higher workforce participation can also strengthen the economy’s capacity to meet growing demand.

Even a sustained increase in births would take around two decades to substantially enlarge the workforce, the OECD notes. Supporting prospective parents and preparing the economy for an older population are consequently tasks governments must pursue together.

The next detailed ABS birth release, covering 2025, is scheduled for 6 November. It will provide the next annual measure of whether Australia’s fertility decline is continuing.