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2021 Intergenerational Report fails to see need for universal childcare

Juliet Helmke
19 July 2021 2 minute readShare

A policy brief from the University of Melbourne’s School of Government argues that the latest Intergenerational Report fails to fully grasp the time, private money and public resources spent on caring for children, putting pressure on the federal government to make a big investment in childcare.

Authored by Miranda Stewart, a professor at the University of Melbourne’s law school and fellow of the Tax and Transfer Policy Institute, the brief is titled “Tax and the Fertility Freefall”.

In it, Ms Stewart examines the findings of the latest Intergenerational Report (IGR), which projects 40-year trends in the Australian economy and is released every five years, as required by the Charter of Budget Honesty.

The 2021 IGR makes a particular focus on the rate of population growth, which is expected to be negatively impacted by lower migration rates due to COVID, but also because of an anticipated dramatic decrease in the fertility rate.

In the 2015 IGR, the long-run fertility rate was projected at 1.9, which is the ratio ​​between the number of children born in a calendar year and the whole female population of childbearing age. The 2021 IGR revises this figure to 1.6, which is a steep drop but, as the policy brief notes, is in line with current global projections.

The figure is also significantly below the population “replacement” rate of 2.1.

While the latest IGR captures this decline, the issue, according to Ms Stewart, lies in its failure to account for resources spent on childcare and the impact on society when a population lacks sufficient support in caring for children.

“In measuring economic growth, the IGR is blind to goods and services delivered within families, or households,” Ms Stewart said. 

She argued that in accounting for fiscal distribution and costs, the IGR only measures public revenues, investments and spending, but ignores unpaid resource investment, particularly of time, by households and volunteers. 

“The IGR observes the ‘traces’ that public statistics capture about taxing and spending to ascertain our ‘socialised’ or public resource allocation. It does not see the much less visible family, household or ‘non-socialised’ investments by families or households. It is missing a crucial element: the economic and fiscal value of non-market care of children,” Ms Stewart said.

“Children are priceless, of course, to their parents — but children are also socially valuable. This should be obvious, but it is surprisingly controversial. People both with and without children depend on the future contributions made by today’s children in taxes and time, to support us in old age.”

To address the economic risks raised within the brief, it advocates for a robust investment in parental care time for all children, with options suited to both parents, for at least the first 12 months after birth, and for universal public childcare. Universal family allowances are also a key recommendation. 

To prevent similar issues in further future planning, it advises the IGR to gain a fuller picture of the economic, social and fiscal resources of time and care in Australia over the coming 40 years. 

Additionally, it recommends that future IGRs examine the care needs of young, old, and the sick and disabled on a range of reliable fertility assumptions, and focus on policies that can address future population risks.

2021 Intergenerational Report fails to see need for universal childcare
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Juliet Helmke

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