Australia’s women are having 1.4 fewer children on average now than they had in the 1950s, an effect known in the media as the “baby drought”. With this trend unlikely to reverse, the onus is on policymakers to ensure that society has everything it needs to function.

Economically, fewer children means less humans to contribute to taxes and growth, while an ageing population increasingly consumes resources.

For accountants, this has flow-on effects in terms of tax and wealth planning for individual clients. For corporate clients, a combination of sound workplace planning and efficient use of technology is needed to combat potential negative effects on their operations.

Dwindling labour supply

According to the federal government’s Intergenerational Report 2023, Australia’s participation rate (the percentage of people of working age engaged in the workforce) is projected to fall over the next 40 years from 66.6 per cent in 2022–23 to 63.8 per cent in 2062–63. 

This reflects the growing number of older people in the population who participate less in the labour force, an effect which will only partially be offset by the higher participation of younger people and future generations.

Read more at In the Black… https://intheblack.cpaaustralia.com.au/economy/why-australias-declining-fertility-matters-for-business-taxation