Australia is heading toward a longer-lived, slower-growing future. Life expectancy at birth is forecast to reach 89 for women and 86 for men by 2066, while the population is expected to reach 39.3 million by 2065/66. The demographic shift promises longer lives, but it also gives policymakers a less forgiving economic equation.
The Treasury will release its latest Intergenerational Report on Monday, offering projections 40 years into the future and guidance for longer-term policy. The new report predicts a population 1.8 million lower than the 2023 forecast, even as Australia continues to grow.
Population growth is expected to slow to 0.9% a year over the next four decades, down from 1.4% annually across the previous 40 years. That leaves Australia’s population slightly lower by the mid-2060s than the earlier report forecast — not a collapse, but a clear change in direction.
Fewer children, longer lives
Almost half the decline in fertility rates comes from fewer people having three or more children and women having fewer children later in life. Combined with rising life expectancy, that change will reshape the balance between population growth and ageing over the period covered by the report.
Treasurer Jim Chalmers warned that the economy faces “serious risks” as the population ages and grows more slowly. The demographic outlook therefore carries consequences beyond the headline population figure, with longer life expectancy and lower fertility changing the conditions behind future economic planning.
Chalmers said, “There are elements of the intergenerational report which are confronting, but it’s not a pessimistic report … because Australians are genuinely better placed and better prepared for all of this accelerating change that we are seeing.” The message is carefully balanced: the numbers are difficult, but the report is not framed as a forecast of decline.
AI becomes the economic bet
Artificial intelligence is expected to become the “defining influence” on the economy over the next four decades. If Australia keeps pace with the global shift towards the technology, AI could provide significant productivity gains across both the public and private sectors.
That opportunity sits beside a warning. The government aims to “minimise the very substantial risks” associated with AI, making technology policy part of the broader response to demographic change rather than a separate exercise in fashionable optimism.
Prime Minister Anthony Albanese said, “We want to see cooperation. We’ve seen that in the past with new technologies, even on nuclear weapons, for example, we saw agreements and”. The supplied statement ends there, but its direction is clear: cooperation is presented as part of managing technological change.
The report also forecasts future government debt to be slashed by half a trillion dollars compared with the forecasts in the 2023 report. That figure sits alongside the lower population projection, longer life expectancy and slower annual growth, giving the government a different fiscal baseline from the one it previously expected.
Australia’s next 40 years will therefore be shaped by two forces moving at once: people living longer and population growth losing pace, while AI takes a central role in the economy. The Treasury’s projections will not settle those questions, but they will define the numbers against which future governments measure their choices.
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