Australia’s population is set to reach 40 million by the 2060s, with significant shifts expected in demographics, wealth distribution, housing, and health care, according to a recent government intergenerational report.
The forecast anticipates an ageing population, with deaths exceeding births for the first time in the nation’s history. Life expectancy is projected to rise to 89.5 years for women and 86.1 years for men, driven by advancements in healthcare and lifestyle improvements. Meanwhile, the birthrate is expected to decline from 1.44 babies per woman currently to 1.34 by 2066. The number of Australians aged over 85 is predicted to triple, which will intensify demands on health services and social support systems.
Economic projections indicate that household wealth will continue to increase, although gains for younger generations are expected to be smaller compared with past cohorts. Wages and living standards are forecast to grow steadily, supported by productivity improvements. However, several economists have expressed skepticism about the government’s assumption of a sustained 1.2% annual productivity growth, warning that lower productivity growth could hinder overall wealth accumulation.
Superannuation balances are expected to improve substantially in the coming decade, with the median balance for 65 to 69-year-olds projected to rise from $204,000 in 2024 to $450,000, unadjusted for inflation. The government anticipates that reliance on superannuation will increase, with drawdowns accounting for close to 6% of GDP by 2066, while expenditure on the aged pension is expected to decline slightly from 2.3% to 1.8% of GDP. Despite this, an ageing population combined with a reliance on income tax revenue is likely to place greater fiscal pressures on working-age Australians.
Housing affordability remains a pressing concern. The report highlights that if home ownership rates among young adults had remained at 1981 levels, an additional 250,000 Australians aged 25 to 34 would currently own homes. Declining affordability has exacerbated intergenerational inequality, with tax incentives such as negative gearing and capital gains tax discounts contributing to an environment where investor lending predominantly fuels purchases of existing housing rather than new construction. Since 2019, 80% to 90% of investor housing loans have been directed toward established properties.
The workforce is expected to adapt to demographic changes, with higher participation rates among women and older individuals. However, the overall proportion of people in employment is predicted to decline, reducing the number of taxpayers and adding strain on future government budgets. Migration is projected to sustain growth in the working-age population, positioning Australia more favorably compared to other OECD nations expected to see population declines.
Healthcare spending will need to increase significantly to meet the demands of an older population, with expenditure projected to rise from 4% of GDP in 2026 to 6.2% by 2066. This shift underscores the multifaceted challenges Australia faces in balancing economic growth, social welfare, and public services amid profound demographic transformation.