Australia is approaching a major demographic shift that could reshape its economy and public services over the coming decades, with the government forecasting that deaths will exceed births for the first time in the 2060s. The projection comes as the country confronts declining fertility, an ageing population and a slowdown in immigration, which for decades has helped sustain population growth.
The warning was contained in an Intergenerational Report published on Monday by the Treasury department. The report identified AI, geopolitical fragmentation, the energy transition, an ageing population and the shift towards a service-based economy as the five most consequential transformations expected to influence Australia’s economic outlook over the next four decades.
Treasury now expects Australia’s population growth to slow to 0.9% a year over the next four decades. That compares with an average annual increase of 1.4% over the past 40 years. The slowdown is expected to reflect declining fertility rates and a fall in net overseas migration — the difference between the number of people entering Australia and those leaving — before migration eventually stabilises.
“For the first time, deaths are projected to outnumber births by the 2060s,” Treasurer Jim Chalmers said in a speech. The projection places Australia’s demographic trajectory alongside that of other advanced economies, including Japan, Germany and South Korea, where deaths have already outnumbered births.
The changing age structure is expected to create additional pressure on essential services. Chalmers said the number of Australians aged over 85 would triple by 2066, increasing demand on health services. The Treasury report similarly warned that an ageing population would drive greater demand for care services, while regions with older populations could face more severe labour shortages in healthcare and aged care.
The demographic challenge is closely linked to Australia’s reliance on migrant workers in those sectors. Healthcare and aged care depend heavily on migrant labour, meaning that a slower rate of migration could add to workforce pressures as demand for care increases with the ageing population.
The issue is emerging as the government also tightens immigration policy. The Labor government tightened immigration rules last week as Prime Minister Anthony Albanese seeks to respond to growing support for the right-wing populist One Nation party, which has pledged to sharply reduce immigration. Albanese’s approval rating slipped this week to its lowest level since he became prime minister in 2022.
The government’s demographic and fiscal challenges are unfolding alongside pressures on household finances. The report flagged the prospect of tax cuts in future budgets as Labor provides further cost-of-living relief to Australians dealing with elevated inflation, higher mortgage rates and expensive housing.
Australia’s projected demographic transition therefore presents a complex economic challenge: population growth is expected to slow at the same time as the share of older Australians rises and demand for health and care services increases. With immigration also projected to decline before stabilising, the country faces a long-term adjustment in how its workforce, public services and economy respond to an ageing population and fewer births.
