Australia's 2066 forecast: older, slower growth and a budget under pressure

Deaths will outnumber births in Australia for the first time in the 2060s.

That is the central projection in Australia's seventh intergenerational report, released on 21 September 2026. The report sets out 40-year projections for population, the economy and the budget, with an outlook to 2065-66. The Guardian Treasurer Jim Chalmers gave a speech at the Australian National University to coincide with the release. Treasury

The document is dated 21 September 2026 and carries ISBN 978-1-923278-63-9. It is a five-yearly exercise. The most recent report before this one was published in 2023 after Covid interrupted its scheduling. Former treasurer Peter Costello conceived the intergenerational report and enshrined it in the Charter of Budget Honesty Act of 1998. The first report was released in 2002.

An older, slower-growing population

Population growth is projected at 0.9% for the foreseeable future, versus 1.4% historically. Fertility, or the average number of children per woman, is projected to drop to 1.34 by 2065-66. The Conversation

The report attributes fallen fertility to "complex economic, social and cultural factors" including more time in education. ABC Deaths are forecast to exceed births for the first time in the 2060s. Reuters

Japan, Germany, Italy and the Republic of Korea have already reached the milestone where deaths outnumber births. Australia has not. Not yet.

The broader context here is worth stating plainly. Treasury is not predicting fewer Australians. It is predicting a different mix. Slower natural increase, which is births minus deaths. An older age structure. More demand for care. That mix matters more than the headline total because it shapes participation, dependency ratios (the share of older people relative to workers) and what the budget has to carry.

A productivity assumption doing a lot of work

Real GDP per person, which is the value of what the economy produces divided by population, is projected to expand by about 1.2% a year over the next 40 years, down from 1.5% in the previous four decades. The report assumes labour productivity, or output per hour worked, will pick up from virtually zero in recent years to the historical average of 1.2%. Like fuel use for a car, it is the efficiency number that decides how far you get.

The report says the rise and adoption of AI is likely to support achievement of Treasury's long-term labour productivity growth assumption.

The report states Australia is at the cusp of a new age of artificial intelligence that will shape economy and society over the coming four decades. It includes a new section on major transitions shaping the economy: the artificial intelligence revolution, geopolitical fragmentation, energy transition, ageing and the care economy, and Australia's industrial transformation.

In an opinion piece titled 'Australia can be big winner from AI revolution – if we get it right' on 1 September, Chalmers said he would release the 2026 Intergenerational Report in a few weeks' time. He had earlier told the Morgan Stanley Australia Summit in Sydney on 11 June that the new report would be released late this year. At a doorstop in Springwood, Queensland, he said he would release the report the next day on behalf of the Albanese Labor government.

In my view, treat that AI caveat as the sentence to underline. Without that return to 1.2%, the income path sags. With it, living standards keep rising, just more slowly than Australians have been used to. Treasury is not scoring a productivity boom. It is assuming a return to average and assigning AI a supporting role. The press gallery has heard this kind of technological optimism before. Sometimes it arrives. Often it arrives later and more unevenly than the baseline implies.

Payments, deficits and equity

Government payments as a share of GDP, which compares spending with the size of the economy, are projected to rise by 1.1 percentage points to 27.4% by the mid-2060s. The report projects an ongoing structural budget deficit, a shortfall that lasts even when the economy is running normally, over coming decades.

The 2026 report also includes a chapter on intergenerational equity, or how costs and benefits are shared between generations.

The political context here is worth noting. That new chapter tells you where Chalmers wants the argument to go. Not just sustainability of the budget in aggregate, but who pays and who benefits across cohorts.

The test for the government version is simple. Ministers will say the report is a call to action on productivity, participation and responsible spending. The figures show why they need that framing. Slower population growth. Slower per-person growth. Higher spending. Persistent deficits. No easy closure.

To be clear, that does not make the projections wrong. It makes them projections. Forty-year baselines built on fertility, longevity, productivity and policy settings that will change. Their value is discipline. They force today's choices about tax, care, energy and AI adoption to be argued in tomorrow's dollars.