The Population Problem

Global warming, weak productivity and falling fertility rates are perhaps the three most pressing challenges facing the world today.
 
Yet of these, one flies under the radar more than the other two and that is the falling fertility rate.
 
For those who are unaware, anything less than 2.1 births per woman will lead to a shrinking population (this is called replacement rate).
 
Today, Japan and South Korea are at the forefront of this demographic crisis, with their fertility rates less than half the replacement rate. Their populations are shrinking fast and with them, economic momentum, innovation and workforce capacity.
 
Globally, the fertility rate has dropped to 2.2, down from 2.7 in the year 2000. And if you remove Africa, where the average fertility rate is still about 4.0, we’re already well below replacement in much of the world.
 
In Australia, we’re sitting at 1.5 births per woman, which is down from 2.0 in 2008.
 
So, why is this happening? The answers are complex and yet familiar: rising living costs, a housing affordability crisis, increasing workforce participation by women and greater access to contraception.
 
While, you’d have to agree that none of these are inherently bad, the long-term consequences of lower birth rates should be discussed more broadly.
 
A declining population brings with it enormous challenges, namely, fewer taxpayers having to support an ageing society that increasingly relies on healthcare, welfare and aged care services.
 
This economic imbalance is already causing our Federal Treasurer Jim Chalmers serious headaches.
 
It’s true, Australia has temporarily avoided the crisis thanks to high levels of working-age migration (among the highest in the world). This has shifted our projected population peak in Australia from 2050 to 2080. But it doesn’t resolve the problem.
 
Migration alone cannot resolve the issue. It stresses housing, infrastructure and social services, often more quickly than governments can act. It is a temporary fix for a long-term problem.
 
We’re rightly focused on environmental sustainability. We’re investing in AI and technology to fix our productivity problem. But where is the conversation about population sustainability?
 
While the answer is complex and multi-pronged, we need to start somewhere.
 
We can empower our young Australians to be financially prepared and educated for family life.
 
Imagine a generation that knows how to build wealth early, manage money wisely and enter the housing market with confidence instead of fear and anxiety.
 
That means teaching them the basics: spend less than they earn, invest early, let compound interest work its magic and make smart housing decisions.
 
We must prioritise population sustainability as much as we prioritise environmental sustainability.
 
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