Australia is projected to experience a significant demographic shift by the 2060s, with deaths surpassing births for the first time, according to a recent government report. This trend poses considerable challenges for the country’s economy, which is already contending with an ageing population, declining fertility rates, and reduced immigration levels.
The Intergenerational Report, released by the Treasury department, highlights five major transformations expected to shape Australia’s economic landscape over the next 40 years: artificial intelligence, geopolitical fragmentation, energy transition, an ageing population, and a shift toward a service-based economy. Central among these is the demographic change linked to population growth, which Treasury forecasts will slow to 0.9% annually over the coming decades. This is a marked decline from an average growth rate of 1.4% per year seen over the past four decades.
Australia’s historical reliance on immigration to offset low birth rates is lessening as net overseas migration – the balance of incoming and outgoing individuals – declines before stabilizing. Treasurer Jim Chalmers noted in a speech that the population aged over 85 is expected to triple by 2066, placing increased demand on health and social services.
The report also draws attention to the pressures an ageing population will place on healthcare and aged care sectors, particularly in regions with higher proportions of older residents. These sectors depend heavily on migrant workers, raising concerns about potential labour shortages.
Recent policy changes further reflect these demographic trends. The Labor government, led by Prime Minister Anthony Albanese, recently tightened immigration rules amid rising support for the right-wing populist One Nation party, which advocates for more stringent immigration cuts. Albanese’s approval ratings have dipped to their lowest point since taking office in 2022, amid these political headwinds.
Additionally, the report anticipates future tax cuts as part of efforts to provide relief to Australians facing ongoing cost-of-living pressures, including elevated inflation, rising mortgage rates, and housing affordability challenges. The government’s fiscal strategy includes balancing economic support with the realities of a changing population structure.
Overall, the report underscores the complex interplay between demographic shifts and economic policy, highlighting the urgent need for adaptive strategies to address the evolving challenges posed by an ageing society and slower population growth.