Australia warns of risks from ageing population, falling birth rates

Australia anticipates that deaths will surpass births for the first time in the 2060s, marking a significant demographic shift with wide-ranging consequences for an economy already facing an aging population, reduced birth rates, and decreased immigration. Historically, Australia has maintained population growth by relying on immigration to compensate for low birth rates.

However, with immigration now slowing, the nation is beginning to follow the trajectory already embraced by advanced economies such as Japan, Germany, and South Korea, where deaths have already surpassed births.

In an Intergenerational Report released on Monday, the Treasury department outlined AI, geopolitical fragmentation, the energy transition, an aging population, and a shift to a service-based economy as the five most significant transformations anticipated to impact the country's economic outlook over the next four decades. The report projects that population growth will decelerate to 0.9 percent annually over the next four decades as fertility rates decline and net overseas migration, representing the difference between incoming migrants and those departing the country, continues to diminish before stabilizing.

This is a considerable decrease from the average 1.4 percent annual increase observed over the past four decades.

The Treasury further emphasized that Australia's population will age more rapidly and grow more slowly than previously projected, according to the report. Deaths are expected to exceed births by the 2060s – a prediction never before made in an Intergenerational Report – at which point natural increase will cease to be a driver of population growth.

This demographic transformation will have substantial implications, particularly for regions with older populations, which will face heightened labor shortages in healthcare and aged care sectors, industries that heavily depend on migrant workers.