Australia Faces Demographic Shift as Deaths Overtake Births

Australia is bracing for a profound demographic transition as the federal government reveals that deaths are projected to outnumber births by the 2060s. This milestone, which has already been reached by major global economies such as Japan, Germany, and France, marks a significant turning point in the nation’s history, signaling an end to the era of natural population growth.

According to the latest Intergenerational Report released by the Treasury on Monday, the total population is expected to reach 39.3 million by the 2065-66 fiscal year. This forecast is notably lower than previous outlooks, sitting 1.8 million people below the projections published just last year in 2023.

A Shift in Growth Dynamics

The Treasury report highlights a cooling in the nation’s expansion, with annual population growth now expected to average just 0.9 percent over the next four decades. This represents a substantial slowdown compared to the 1.4 percent average recorded over the preceding forty-year period.

A critical driver of this trend is a sharp decline in the fertility rate, which is projected to fall to 1.34. Consequently, the government anticipates that immigration will become the sole engine of population growth. Furthermore, the demographic profile of the country is aging rapidly, with the number of Australians aged 85 or older forecast to triple by 2066.

Economic Resilience and Risks

Despite these shifting sands, Treasurer Jim Chalmers remains optimistic about the nation’s fiscal trajectory. He expects the economy to more than double in size by the mid-2060s, driven by advancements in artificial intelligence and increased workforce participation from women and older citizens.

“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,” said Treasurer Jim Chalmers.

However, this outlook arrives at a challenging time. Australia’s long-standing reliance on migration-driven growth is currently being tested by a persistent slump in labor productivity. The Australian Bureau of Statistics reports that the 20-year average for annual productivity growth fell to 0.8 percent in 2023-24, down from 1.8 percent two decades earlier.

Skepticism from Industry Leaders

The Business Council of Australia, representing over 120 of the country’s largest firms, has expressed significant doubt regarding the government’s growth assumptions. They argue that counting on a productivity surge driven by artificial intelligence to reach a 1.2 percent growth rate is a risky gamble.

The council pointed out that current real GDP per person is already nearly $2,000 lower than the 2023 projections, largely due to stagnant productivity. They warn that the economic strain is not a future problem but a present reality that requires urgent intervention to avoid long-term stagnation in living standards.