The migration debate has a big blind spot: much of regional Australia is shrinking

The 2026 Intergenerational Report warns of a concerning population trend for much of regional Australia, with lower fertility rates, reduced migration, and faster aging. This demographic shift threatens to create a significant divide between younger workers supporting aging residents and rural businesses. While capital cities are expected to continue growing, many regional cities, particularly those under 50,000 in population, are projected to decline.

This phenomenon is driven primarily by international migrants in their prime working and family-raising years, which have offset the loss of the 15-24 age group. Without these migrants, smaller regional areas could experience a population decline and a vicious cycle of service reductions, job losses, and social capital erosion. First Nations communities, however, show some resilience with higher birth rates and a younger age structure in parts of Queensland, the Australian Capital Territory, and Victoria.

Nevertheless, turning demographic advantage into economic strength and preserving opportunities for Aboriginal and Torres Strait Islander peoples is crucial. To address the issue, the report suggests increasing overseas migration to rural and regional Australia through integrated workforce, housing, service, and infrastructure planning, alongside appropriate visa pathways.

Economic diversification can also help attract and retain younger people to rural areas. The authors emphasize that a comprehensive population policy is needed to sustain smaller rural and regional communities as capital city birth rates fall and labor demand pulls younger individuals away from these regions.