New research from the e61 Institute shows that the Howard Government's Baby Bonus increased the total number of children families went on to have — the first evidence that the policy boosted long-run fertility, not just the timing of births.
As governments around much of the world grapple with declining fertility, there have been calls for a renewed Baby Bonus, which in 2004 provided $3,000 for every birth.
The $3,000 Baby Bonus lifted births by 6.5 per cent — around 16,250 extra babies in its first year — and mothers exposed to the policy went on to have 6.8 per cent more children by 2022.
"Our research shows the Baby Bonus raised completed fertility in Australia," said Dr Pelin Akyol, Research Manager at the e61 Institute. "Women exposed to the policy were more likely to end up with three or more children in total. This is the first evidence that the Baby Bonus increased long-term family size, not just the timing of births."
The program applied universally to all births, costing around $799 million a year — equal to about $50,000 per additional birth at the time, or $86,000 in today's dollars.
The e61 research paper How Financial Incentives Shape Fertility in Australia also finds that the policy had the greatest impact among lower-income, less-educated, and older mothers.
"The policy made the most difference for lower-income families. Births rose by 10 per cent among mothers with no taxable income and by 8 per cent among those below the median income, while higher-income families showed little or no response," said Dr Ali Vergili, Postdoctoral Researcher at the e61 Institute.
"Education mattered too. Mothers who had not finished Year 12 had nearly 8 per cent more births, compared with only a modest response among university-educated women. And the strongest response came from older mothers — women aged 35 to 39 had more than 13 per cent more births."
With Australia's fertility rate now at a record low of 1.5 births per woman, these findings highlight how financial incentives can shape fertility, who is most responsive, and the trade-offs governments must weigh when designing family policy. However, the same effect might not be observed if such a policy were reintroduced today, as families now have access to broader supports — including paid parental leave and expanded childcare — that were not available in the early 2000s.
