The Intergenerational Report (IGR) – a three‑yearly publication that gauges how demographic and economic trends will shape Australia’s budget and society through 2066 – flags “four decades of accelerating remarkable change”.
Demographically, the IGR projects that the number of Australians aged 85 and over will triple to 1.9 million by 2066, driven by a falling total fertility rate that is expected to dip from 1.48 children per woman today to 1.34 by 2065‑66. Overall population growth is forecast to slow to 0.9 % per year, down from 1.4 % in the previous four decades.
Fiscal forecasts show the federal budget running a deficit of about 0.3 % of gross domestic product (GDP) each year until 2036‑37, after which the shortfall widens to 1.8 % of GDP by 2065‑66. Federal debt as a share of GDP is expected to fall from 33.1 % in 2025‑26 to a low of 22.2 % in the mid‑2050s, but could rise to more than half the size of the economy if productivity growth does not meet expectations.
The report’s debt and deficit outlook rests on an assumed long‑run productivity growth of 1.2 % per year – a figure higher than the 0.8 % average recorded over the past 20 years. Opposition leaders have seized on this assumption, accusing Treasurer Jim Chalmers of “cooking the books”. Labor elder Bill Kelty and some economists have called for tax reforms to ease the burden on younger workers, while Coalition frontbencher Andrew Bragg has suggested raising the Goods and Services Tax. Chalmers dismissed the previous government’s use of a 20‑year productivity average as “rubbish” and adopted a 30‑year average of 1.2 % for the report.
The IGR identifies five “transformations” that will intensify in coming decades: rapid diffusion of artificial intelligence, the transition to renewable energy, heightened geopolitical competition, a shift toward a service‑ and care‑oriented economy, and the need for greater economic openness balanced against national security concerns. The report notes that AI could have “profound” economic and social implications, while the energy transition is expected to lower household electricity costs as renewable capacity expands.
Without further reform, fiscal pressures from an ageing population and a shrinking tax base will increase the share of revenue derived from personal income taxes, as indirect taxes are projected to keep declining. The report warns that these trends will add pressure on working‑age Australians and calls for policy action to sustain the fiscal position.
Economists note that real gross national income per person is projected to rise by 55 % by 2066, though the annual growth rate of national income per person is expected to slow to 1.1 % over the next 40 years, down from 1.9 % in the previous four decades. Life expectancy is also set to increase, reaching 89.5 years for women and 86.1 years for men by 2065‑66.