Australia's Deaths to Outnumber Births by 2060s, Because Nothing Says 'Bright Future' Like a Demographic Deadline

Australia is on track to reach a grim milestone by the 2060s: more people dying than being born, according to the government's seventh intergenerational report (IGR). The report, which sounds like a dystopian novel but is actually a budget document, lays bare the challenges of an ageing population amid rapid change and lower economic growth.

Treasurer Jim Chalmers, in a speech at the Australian National University, said the report "illuminates the road ahead." He noted, "No previous IGR has contended with global challenges this great, with politics this fraught, or a future less certain." So, business as usual, then.

The 40-year projections show the population will keep ageing as fertility rates fall, leading to deaths outnumbering births for the first time by the 2060s. The report notes that many advanced economies - Japan, Germany, Italy, and the Republic of Korea - have already hit this milestone, with most others expected to follow in coming decades. Australia, ever the trendsetter, is just late to the party.

With population growth set to slow to 0.9% from the historical 1.4%, and a shrinking share of working Australians supporting the economy and budget, the IGR predicts a "new normal" of lower growth. Living standards will still improve, just not as quickly - because who needs rapid progress when you can have a leisurely stroll into the future?

Real GDP per person will expand by about 1.2% over the next 40 years, down from 1.5% in the previous four decades. And that's assuming productivity picks up from virtually zero to the historical average of 1.2% - a leap of faith that leans heavily on AI, which Chalmers calls "the biggest economic transformation of our lifetime." No pressure, robots.

The report says AI will likely support Treasury's long-term labour productivity growth assumption, with Chalmers describing its role as "pivotal." It also notes that Australia's productivity will depend on adopting innovation, supporting investment, developing skills, and delivering regulatory reforms. In other words, the usual laundry list of things governments promise but rarely deliver.

The forecasts highlight the tightrope the government must walk: protect Australians from the worst of new technology without stifling the one thing that could drive future prosperity. Good luck with that.

The IGR is a five-yearly exercise, though it was last published in 2023 after Covid interrupted its scheduling. Peter Costello, a former Liberal treasurer, first conceived of the IGR and enshrined it in the Charter of Budget Honesty Act of 1998. First released in 2002, each report has highlighted similar challenges: pressures on services for older Australians and how to pay for them, not least the growing tax burden on a shrinking share of workers.

The IGR projects an ongoing structural budget deficit over coming decades, shrinking over the next 10 years before expanding again over the following 40. Government payments as a share of GDP are anticipated to rise by 1.1 percentage points to 27.4% by the mid-2060s. The report says maintaining a sustainable budget will require policies and ongoing reforms to manage growing spending and revenue challenges. Shocking.

This year's report also included six "major transitions" for the next 40 years, topped by the AI "revolution" and geopolitical fragmentation. The next four challenges are the energy transition, ageing and the care economy, industrial transformation, and intergenerational equity. Chalmers said, "The world is becoming more dangerous, more unpredictable, more unequal, and more divided. These are not just individual threads but part of a bigger fraying of that intergenerational promise, of better times." Cheery stuff.

The treasurer said responding successfully to these challenges would be key to defeating populist insurgencies that seek to weaponise public discontent. Because nothing says "vote for us" like a report predicting death and lower growth.

The IGRs also provide a robust argument in favour of compulsory super, which has largely offset the huge budgetary impact experienced in other countries associated with funding retirement incomes. So, at least there's that.