Australia warns of risks from aging population, falling birth rates

Australia's treasurers have warned of risks stemming from an aging population and falling birth rates. For the first time, deaths are expected to surpass births by the 2060s, according to the Intergenerational Report published on Monday. This demographic shift will have significant implications for an economy already contending with an aging populace, declining birth rates, and reduced immigration.

For decades, Australia has maintained population growth by relying on immigration to counteract low birth rates. However, as immigration now decelerates, the country is confronting a trajectory similar to that of advanced nations like Japan, Germany, and South Korea, where deaths have already outpaced births. The report identifies artificial intelligence, geopolitical fragmentation, the energy transition, aging population, and a shift towards a service-based economy as the five most consequential transformations affecting the country's economic outlook over the next four decades.

Population growth is now projected to slow to just 0.9 percent annually over the next four decades, down from an average of 1.4 percent over the past 40 years. The number of Australians over 85 is projected to triple by 2066, straining health services. The left-leaning Labour government recently tightened immigration rules amid rising support for the right-wing populist One Nation party, which advocates for stricter immigration limits.

Treasurer Jim Chalmers noted that the aging population will increase demand for care services, with regions featuring older demographics facing greater labor shortages in healthcare and aged care sectors—fields heavily reliant on migrant workers. The report also highlighted tax cuts in future budgets as Labour provides additional cost-of-living relief to Australians grappling with inflation, higher mortgage rates, and expensive housing.