Australia’s Deaths Expected to Outnumber Births by 2060s as Population Ages

Australia is projected to record more deaths than births by the 2060s as its population continues to age and fertility rates decline, according to a new government report.

The forecast was contained in the latest Intergenerational Report released by Australia’s Treasury on Monday.the report projects that the country’s population will reach 39.3 million by 2065-66, about 1.8 million fewer than estimated in the previous outlook released in 2023.

The demographic shift would put Australia alongside several other advanced economies, including Japan, Germany and France, where deaths have already surpassed births.

According to the Treasury, Australia’s population growth is expected to average 0.9 per cent annually over the next four decades, compared with an average annual growth rate of 1.4 per cent recorded during the previous 40 years.

The report also projects a significant increase in the number of elderly Australians.

The population aged 85 and above is expected to triple by 2065-66, placing additional pressure on healthcare, aged-care services and other areas of public spending.

At the same time, Australia’s fertility rate is projected to fall to 1.34 children per woman. With natural population growth weakening, the Treasury expects immigration to account for all of the country’s population growth in the coming decades.

Despite the demographic challenges, the government forecast that Australia’s economy could more than double in size by the middle of the 2060s.

The Treasury attributed part of the expected economic expansion to improvements in productivity, including potential gains from artificial intelligence, as well as increased participation in the workforce by women and older Australians.

Treasurer Jim Chalmers said Australia faced significant challenges from demographic change but argued that the country had important advantages that could help it manage the transition.

“The report confirms Australia is better placed and better prepared to deal with rapid change than most countries, but despite our advantages we cannot be complacent,” Chalmers said in a statement accompanying the report.

The projections come as Australia continues to rely heavily on migration-driven population growth while facing concerns over declining labour productivity and living standards.

Data from the Australian Bureau of Statistics showed that Australia’s 20-year average for annual productivity growth fell to 0.8 per cent in 2023-24, compared with 1.8 per cent in 2003-04.

Labour productivity measures how efficiently an economy produces goods and services using available labour.

Higher productivity can support stronger economic growth and contribute to improvements in living standards.

However, the government’s assumptions about future productivity growth have attracted scepticism from the Business Council of Australia, which represents more than 120 major companies.

The council said it could not be assumed that long-term productivity growth would automatically increase to 1.2 per cent because of advances in artificial intelligence.

Business Council Chief Executive Bran Black said Australians were already experiencing the effects of weak productivity rather than the issue being one that would only emerge several decades from now.

He said real gross domestic product per person was almost $2,000 lower than projected in the government’s 2023 forecast, which he attributed to weaker-than-expected productivity growth.

“This is not a problem that starts 40 years from now – Australians are already paying the price for our failure to lift productivity through lower living standards,” Black said.

Tim Robinson, a research fellow at the Melbourne Institute of Applied Economic and Social Research, also said artificial intelligence could potentially help improve Australia’s productivity performance, but warned that the scale and timing of any gains remained uncertain.

Robinson noted that labour productivity in Australia had remained broadly flat for about a decade, limiting the pace at which the economy could grow without generating inflationary pressures.

“If the Australian economy achieves the productivity growth assumed in the Intergenerational Report, that would be a marked turnaround,” he said.

The demographic outlook highlights the long-term changes Australia is likely to face as its population ages, birth rates decline and migration becomes increasingly important to population growth.

The government’s report suggests that managing these changes will require sustained attention to productivity, workforce participation, immigration, healthcare and the economic needs of an ageing population.

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