Australia’s population is set to increase to more than 40 million in the next 40 years, eclipsing previous estimates, a highly anticipated report is expected to show.
To be released by Treasurer Jim Chalmers on Thursday, the sixth Intergenerational Report (IGR) – which covers trends in population, productivity and spending – will reveal the longer-term issues facing the nation’s finances.
Australia’s population is expected to climb to 39.8 million by 2060-61, a million more than the previous projections for 38.8 million released in 2021, and pass 40 million by 2063.
Additionally, Australians are expected to live longer with life expectancies forecast to rise to 87 years for men and 89.5 years for women by 2062-63.
The number of people over 65 is set to double, and the number of Australians over 85 will triple, according to the report.
It is expected Australians will remain healthier to an older age, and have fewer children, which is expected to bring long-term economic challenges as more people rely on government-funded services for longer.
This will bring increased government spending on aged care and support services.
Over the next forty years, overseas migration is also forecast to be the lion’s share of population growth, and is expected to account for 0.7 percentage points of the average annual population growth rate of 1.1 per cent.
While the government expects net-overseas migration to reach 315,000 migrants in 2023-24, the long term intake will ease to 235,000 people a year through to 2062-63.
The Treasurer will also use the release of the IGR to claim that Australia’s trajectory of sluggish productivity growth is not a foregone conclusion if business and the broader community join forces with the government to overcome the nation’s productivity problem.
Productivity – how efficiently labour can produce goods and services – has become a political flashpoint in recent months, amid warnings that the nation’s anaemic productivity growth, if not reversed, could lead to a decline in living standards.
According to recent analysis from the Productivity Commission, more than 80 per cent of national income growth in the last three decades is attributed to productivity gains.
But productivity has stagnated in recent years, slumping to a 60-year low over the past 10 years.
In his October budget, Mr Chalmers lowered the government’s long-term productivity growth assumptions from its 30-year average of around 1.5 per cent, to its 20-year average of around 1.2 per cent per year.
To arrest Australia’s faltering productivity performance, the Treasurer is expected to outline key “areas of opportunity” for the government to unleash the next era of productivity gains. These include growing the nation’s economic dynamism, encouraging innovation and investment, and skilling Australia’s workforce.
“The Albanese Government has a laser-like focus on Australia’s productivity performance, which was ignored and left to fester for the best part of a decade,” the Treasurer will say.
“We have an ambitious productivity agenda because we know how important it is – boosting productivity is vital to boosting wages and living standards.
“By maximising the opportunities of the energy transformation, embracing new technology, by investing in our people and their skills, we can build a more productive and prosperous economy.”