Data, demographics and economics might not be everyone’s cup of tea, but not matter what their level of interest, all current or prospective parents of young children in Australia should familiarise themselves with one piece of demographic data and its economic consequences.
A while back, economic gadfly and guru Chris Joye posted the following Australian Bureau of Statistics chart on his blog:
The graph shows the number of births per year in Australia over the previous 20 years. The quite noticeable jump at the end of this graph is the effect of the Federal Government’s baby bonus scheme.
It shows we’re in the midst of an enormous Baby Boom. There are going to be a lot of tots wandering around over the coming years.
In fact, when the NKOTB is born next year, she will enter the world with around 60,000 more peers than I did when I was born at the start of the 1980s.
Why do I say that current and prospective parents should familiarise themselves with it? Well, because the short term economic consequences of this baby boom will have an enormous impact on you and your children’s lives over the coming decade.
The graph above underpins a sudden and significant increase in demand for the kinds of products and services consumed by young children; most significantly, childcare.
First year economics teaches that a sudden increase in demand should result in a sudden increase in prices. It also teaches that for services that are either heavily regulated or provided by Government, a sudden increase in demand will result in shortages.
Which is of course exactly what we’re experiencing. It’s why childcare places are currently so expensive. It’s why waiting lists for inner Melbourne childcare centres are hitting 12-24 months. It’s why Joyce and I have been (jokingly) canvassing moving into a commune based shared parenting collective.
Again, most parents would have already been more than familiar with this state of affairs. However, what the graph above shows is that they should get used to higher prices, reduced access and lower quality for services that their children consume, compared to those that they consumed when they were a child.
The bow wave of the 2007+ Baby Boom will wash over every aspect of our children’s lives. Unless major action is taken now, current childcare shortages will spill over into kindergarden shortages, pre-school shortages, primary school shortages and then high school shortages.
If it’s possible for me to predict this now, it’s obvious that the government and education bureaucrats will be aware of the problem. But given the track records of governments of all political stripes in long term planning and the current environment of fiscal restraint imposed by the fallout of the GFC, I don’t think I’m being overly cynical to believe that the government is not going to make the investments needed to accommodate this baby boom.
So, the next time you’re complaining about the price and hassle of getting the services you need for your kid, think of the graph above and remind yourself “Get used to it”.
Posted: 16th December 2010