Australia’s population is projected to reach 39.3 million by 2066, while the economy could be 2.25 times larger, under a long-term outlook delivered by Treasurer Jim Chalmers.
The latest Intergenerational Report, published by the Treasury every three years, forecasts average population growth of about 0.9 per cent a year and economic growth of 2 per cent annually over the period.
Productivity is expected to increase by 1.2 per cent a year, while real incomes could be 55 per cent higher. However, Australia is also projected to become significantly older, with a median age of 45 and the number of people aged over 85 set to triple.
Australia’s 2066 outlook includes rising climate costs
The report forecasts an average of 1.34 babies per woman and warns that climate change will put further pressure on the economy. Crop yields are expected to fall by 3.6 per cent, while government spending on natural disasters is projected to triple.
Government payments are expected to rise to 27.7 per cent of the economy, driven by increased spending on health, defence, aged care and the National Disability Insurance Scheme.
By contrast, spending on age and service pensions, education and welfare payments is forecast to decline as a proportion of the economy. Reforms to the disability scheme and aged care are expected to slow the growth of spending in those areas.
Energy use is also set to change sharply. Demand from data centres is projected to account for almost 10 per cent of the National Electricity Market by 2050, while household energy costs are forecast to fall by 40 per cent.
Coal production is expected to decline by 71 per cent by 2050. The spread of electric vehicles is forecast to more than halve fuel excise revenue, while lower consumption is expected to reduce alcohol and tobacco excise receipts.
The latest projections have been revised down since the previous report in 2023 for population size and growth, economic size and growth, fertility rates and government spending.
Forecasts for the average age of the population and real income per person have been revised upwards, while the productivity outlook remains unchanged.
