More to babies than bonus

The baby bonus has been given more credit than it deserves for its contribution to the breeding frenzy. A new analysis suggests it has merely played a "modest" role in lifting the fertility rate.

Instead, says a Productivity Commission report, the biggest factor that has pushed the fertility rate up to an estimated 1.93 babies per woman - the highest it has been since the early 1980s - is "recuperation". The theory is that women who had delayed childbearing in their 20s start to reproduce in their 30s. This shows up as higher fertility rates for older women.

There were 285,254 births in Australia last year, about 7 per cent higher than the previous year. More babies were born last year than in any year in Australia's history.

The Howard government introduced the baby bonus in 2004 as a one-off $3000 payment, which rose to $4000 in 2006. The Rudd Government increased the payment to $5000 last month.

But the report argues the baby bonus represents a reduction of about 1 per cent in lifetime costs for a first child for a typical family. This is based on the Productivity Commission's estimate that the cost of raising one child until age 21 is $385,000.

It argues the "increased generosity" of family welfare, which also includes family tax benefits, has played a modest role in the so-called baby boom. However, the stated intention of these policies is not to boost fertility.

The Minister for Families, Jenny Macklin, said in a statement that the report highlighted that family payments were important for parent and child wellbeing.

The report says the baby bonus may be linked to a 7 per cent rise in fertility rates among teenagers in the Northern Territory since 2004. The Government is paying the bonus in 13 fortnightly instalments and the baby bonus is included in welfare quarantining trials.

Bob Birrell, the director of Monash University's Centre for Population and Urban Research, said there had been much speculation about the upsurge in births coinciding with the availability of the baby bonus but there were more compelling factors behind the trend.

"There are a lot of women in those peak childbearing ages in their early 30s and that same generation now is the generation that had very few births when they were in their 20s," he said. "There's no evidence that young women are no longer interested in having children. It's more a matter of timing."

The report says two other factors have contributed to the fertility spike. One is "anticipation" - where some women are having babies sooner than planned, partly because good economic circumstances. The other is the "quantum" effect: some women are having more babies than they would have expected to have over a lifetime.