Australia warns demographic ageing could put growing pressure on the economy

Yesterday 13:30

By: Azzat Manal

Australia warns demographic ageing could put growing pressure on the economy

The Australian government has warned that faster demographic ageing and slower population growth could create significant economic and fiscal challenges in the coming decades, as declining fertility rates reshape the country’s demographic outlook.

Treasurer Jim Chalmers said the decline in fertility was occurring more rapidly than previously anticipated, raising concerns about the long-term impact on public finances, workforce growth and the ability to fund essential services as the population ages.

Australia’s Treasury is expected to release its latest Intergenerational Report, a long-term assessment designed to examine how demographic, economic and social trends could affect government finances over the next four decades. The report is intended to help guide policy decisions on issues including healthcare, retirement incomes, taxation, productivity and workforce participation.

According to the latest projections cited by the government, Australia’s population is currently estimated at around 28.1 million people and could reach approximately 39 million by the middle of the 2060s. That projection is lower than earlier estimates that had placed the population above 40 million.

A slower-growing population combined with a rising share of older Australians can have broad economic consequences. A smaller proportion of working-age people may increase pressure on pension and healthcare systems while reducing the growth of the labour force. Governments may therefore face greater demand for public services at a time when the tax base is growing more slowly.

The demographic shift is also expected to influence Australia’s labour market, housing needs and demand for healthcare and aged-care services. At the same time, higher productivity, increased workforce participation and carefully managed migration remain among the factors that can influence the country’s long-term economic capacity.

The government’s latest assessment is expected to provide a detailed picture of these demographic trends and their potential implications, highlighting the importance of long-term planning as Australia adjusts to a changing population structure.