How Will an Ageing Society Affect the Economy?
Australia faces a demographic turning point where deaths will outpace births within four decades, according to the government’s seventh intergenerational report. Released amid slowing economic growth and rapid societal change, the report highlights the mounting pressure of an ageing population on public finances and services. It warns that without policy adjustments, the imbalance could strain healthcare, pensions, and workforce sustainability.
The report projects that by 2060, the number of Australians aged over 65 will nearly double, while the working-age population shrinks relative to dependents. This shift is driven by declining fertility rates and increased life expectancy, which together reduce the tax base supporting age-related expenditures. Treasurer Jim Chalmers noted the findings underscore the need for long-term planning, saying Australia must adapt to „a new reality of slower growth and greater demand on social systems.”
Can Immigration Help Balance the Demographic Shift?
An older population means fewer workers contributing to tax revenue and more people accessing pensions and aged care. The report estimates that spending on health, aged care, and age pensions could rise from 4.5% to nearly 8% of GDP by 2060 if current trends continue. This fiscal gap would require either higher taxes, reduced spending elsewhere, or reforms to boost productivity and workforce participation. Business groups have urged investment in skills training and immigration to offset labour shortages.
While migration has historically supported population growth, the report cautions it is not a complete solution to ageing. Net overseas migration is expected to remain around 235,000 annually, but even this level only slows, not reverses, the ageing trend. Experts argue that skilled migration must be paired with policies encouraging higher workforce engagement among older Australians and greater support for families to raise children. Without such measures, the dependency ratio will continue to climb.
What is the intergenerational report? It is a government publication released every five years that analyses long-term economic and fiscal trends, focusing on population ageing, climate change, and digital transformation to guide future policy.
Frequently Asked Questions
Why are deaths projected to exceed births? Falling birth rates and rising life expectancy mean fewer children are being born while more people live longer, creating a natural point where deaths surpass births unless fertility increases significantly.
Does the report recommend raising the retirement age? The report does not prescribe specific policies but highlights that maintaining current retirement ages may become fiscally challenging, suggesting the need for ongoing review of pension and workforce settings.