Back in 2004, then Treasurer Peter Costello famously encouraged Australians to “have one for mum, one for dad and one for the country”.

The ‘baby bonus’ set out to lift Australia’s birth rate, during a long period of economic stability, amid changing immigration patterns and as a whole generation of women had children later in life than ever before.

Whether it was the policy, the sales pitch, or a broader set of economic and social factors, it worked. From the mid-2000s, the numbers of births in Australia began to climb, and quite sharply.

The Costello baby boom would be bigger than the peaks in either the post-war period or the 1970s.

In 2007 alone, around 285,000 babies were born— around 7 per cent more than the previous year and 100,000 more than at height of the post-war boom in 1947. At the time, this was the highest number of births ever registered in Australia.

Ever since, these babies have been steadily growing up, and in the next few years, the first of them will start to turn 18. Many of them will want to pursue a university education, just like their brothers and sisters, at one of our nation’s world-class universities.

But there’s a hitch. The nation’s university funding system is now capped, and not increased in line with inflation—meaning the real value of that funding erodes further every year.

So even if demand for higher education grows in the Australian community, universities aren’t funded to offer places to keep up with population growth, or greater needs in some communities, or inflation.

In 2020, there’ll be lift in the cap and that’s good, but it is based on the national population growth rate of 18 to 64 years (forecast to be about 1.3 per cent) under a new performance funding scheme. Even if universities hit all the performance targets, the funding won’t keep up with inflation and enable universities to meet demand in regions with faster growing populations.

This presents a shared challenge for Government and universities, as well as for employers, students and families across the nation. How do we ensure the coming generation of ‘Costello babies’ doesn’t miss out on the same life-changing education opportunities that their older brothers or sisters were able to access?

The 18-year-old population will start to climb from 2021 — in just two years’ time. In 2024, 10,000 more will come of age, and by the end of the decade there will be 55,000 more 18-year-olds than there are today.

Unless we rise to that shared challenge, some of those young people will miss out on the transformational opportunity of a university education.

Remember that young people from regional Australia are, on average, still only half as likely to have a university degree as their city counterparts.

The opportunity to go to university isn’t just important for these students, it is also crucial if we are to meet the skilled workforce needs of the economy. This month, the Productivity Commission and Deloitte have swelled the ranks of respected analysts telling us that we need more not fewer highly skilled graduates to deal with seismic workforce change. And this involves harnessing all the talent available to us, giving all Australians with the aptitude and application the opportunity a university education.

As a new Parliamentary term gets underway, the Government and Parliament have begun grappling with big questions on how to bolster future prosperity — particularly as there are signs the global economy may slow. 

An important element of securing that future prosperity will be the investment we make, as a nation, in a homegrown and highly-skilled graduate workforce.

University funding settings must allow Australia to meet changes in demography and workforce needs, so we can all reach our full potential as individuals and as a nation.