Australia’s economic challenges are mounting as deaths start to outnumber births. But ‘baby bonus’ policies would be pointless | Nicki Hutley

Australia's population is forecast to experience a demographic shift by the 2060s, with deaths projected to surpass births for the first time in history. This development, revealed in the Treasury Department's Intergenerational Report, will bring significant challenges for an economy already grappling with an ageing populace, declining birth rates, and reduced immigration.

Australia has traditionally maintained population growth through immigration to counteract low fertility rates. However, as immigration begins to slow, the country is exploring a trajectory similar to that followed by several advanced economies, where death rates have already outpaced birth rates.

The Intergenerational Report, published yesterday, identified artificial intelligence, geopolitical fragmentation, the energy transition, an ageing population, and a shift to a service-based economy as the five most critical transformations affecting Australia's economic outlook over the next four decades. Population growth is now expected to decelerate to 0.9 percent annually over the coming four decades, compared to the average 1.4 percent rise observed over the past four decades.

This is due to declining fertility rates and a decrease in net overseas migration, which will eventually stabilize.

Treasurer Jim Chalmers, in a recent speech, confirmed that for the first time, deaths are projected to exceed births by the 2060s. Additionally, the number of Australians over the age of 85 is expected to triple by 2066, placing additional strain on healthcare services. The Labor government, in an attempt to address the surge in support for the right-wing One Nation party, which advocates for stricter immigration controls, recently tightened immigration rules.

Prime Minister Anthony Albanese's approval rating has plummeted to its lowest point since he assumed office in 2022.

The report also highlighted that an ageing population will increase demand for care services, with regions characterized by older demographics facing more substantial labor shortages in healthcare and aged care sectors, which heavily depend on migrant workers. To alleviate the economic pressure on Australians, who are currently dealing with rising inflation, higher mortgage rates, and expensive housing, the Labor government is set to introduce tax cuts in future budgets.