Father of the baby bonus Peter Costello wants falling fertility rate 'back on the agenda'

It became an iconic line that encapsulated a controversial scheme — paying cash to baby-producing families.

"Have one for your husband and one for your wife and one for the country," then treasurer Peter Costello told the nation after the "baby bonus" in the 2002 Federal Budget gave parents $3,000.

With Australia's birth rate falling to new lows, and concerns about the economic impact of the future slump of workers and taxpayers, the former treasurer still thinks all options need to be examined to encourage people to have more children.

The Costello baby bonus was wound back about a decade ago.

Australia's fertility rate has since fallen to a near-record low of 1.48 births per woman.

"I think the government's got to put it back on the agenda," Mr Costello told The Business.

"Is our government worried that we're heading to a situation where we'll have more people dying than being born in Australia?

Mr Costello spoke at an e61 Institute event in Sydney on Wednesday night after the institute released a report highlighting the issue.

Researcher Ali Yasin Vergili says a combination of factors are responsible.

Fundamentally, he says more Australian women are not having children. 

Among women aged 50-54, who have mostly left their childbearing years behind, the share who have not had children increased from 13 per cent in 2006 to 16 per cent in 2021.

"Second, among women who do have children, they are having fewer children," Dr Vergili wrote in his report for e61.

For instance, the average number of children per mother aged 30-34 fell from 2.04 in 2006 to 1.88 in 2021. 

Among older mothers who began families decades ago, they too are having fewer children than previous cohorts.

What this means is the conventional "replacement rate", which assumes 2.1 births per woman, assumes nearly all women have children.

"But when a growing share do not have children, keeping the population stable without immigration requires those who do become mothers to have more children," he wrote.

"With people having fewer children the gap between current fertility and replacement continues to widen."

Previous research from the e61 Institute found the baby bonus did boost the number of children, at a cost:

• The Costello baby bonus increased monthly births by 6.5 per cent — about 1,300 additional births per month
• It did not affect birth spacing, indicating births were not simply brought forward
• Mothers who received the baby bonus, as a group, had 6.8 per cent more children in total by 2022, showing it increased completed fertility
• Each additional birth cost about $50,000 in 2004. In 2025 it is about $86,000.

The long-serving treasurer during the Howard government of the late-90s and early 2000s remains concerned.

"The thing that worries me the most is, having made this such an issue, having led the world on this issue 20 years ago, we've had governments, successive governments, that have just sat on their hands, let it slip off the agenda, watch the fertility rate decline," Mr Costello told The Business.

"And that's now baked in. If you turn the fertility rate tomorrow it wouldn't have any effect in producing adults for 20 or 30 years. 

"I think the government's got to get serious about this and it's got to talk about it."