The average age of the Australian population will keep rising, and women will have fewer babies, but the population is forecast to grow by more than 4 million people over the next decade, thanks to strong migration.
Treasury’s annual population statement released on Friday said the federal budget would come under more spending pressure because of older people’s demands for health and aged care, with almost one-quarter of the population projected to be 65 or older by 2065.
There will be an extra 1.4 million people aged over 70 a decade from now.
The total population is projected to expand from 27 million people in 2024 to 31 million by 2035 and 41 million by 2065, with capital cities expected to grow almost twice as fast as regional areas.
Mining-rich Western Australia and Victoria, which experienced a net outflow of people during the pandemic, are projected to be the fastest-growing states; Tasmania and South Australia, which have older populations, are projected to grow at the slowest pace.
The 88-page statement was released as the Albanese government comes under sustained pressure from Opposition Leader Peter Dutton over the record influx of migrants since the international border reopened after the pandemic.
Net overseas migration soared to 537,000 in 2022-23, eased to 460,000 in 2023-24 and is on track to decline to 340,000 this financial year.
Caps on foreign student numbers
Although the number of entrants to the country is now around what had been anticipated, international students and workers are not leaving as quickly as expected.
The government has introduced caps on foreign students studying at universities and cracked down on dodgy colleges providing low-quality courses.
Population growth is tipped to slow from 2.1 per cent last financial year to 1.2 per cent over the next decade.
Treasurer Jim Chalmers said: “A big part of preparing for the future is understanding the demographic dynamics that are shifting and shaping our economy.”
Australia’s fertility rate has been declining since the early 1960s and is expected to remain at record lows through to June 2025, before picking up slightly to 1.62 births per woman by 2031-32.
There will be more deaths than previously forecast, as COVID-19 remains a contributor to excess mortality, accounting for 2.2 per cent of deaths in 2023-24, Treasury says.
Ageing will continue to present a demographic challenge for government finances.
The median age is projected to increase by 5.3 years between 2022-23 and 2064-65, to reach 43.6 years.
There will be a growing proportion of retirees relative to working-age people paying income taxes to fund government services.
The old-age dependency ratio – which measures the number of people aged 65 and over for every 100 people of traditional working age (15 to 64) – was 15 per cent in 1983, rose to 26.5 per cent in 2023-24 and is tipped to hit 39 per cent in 2065.
“This increase will present fiscal challenges as demand for services such as aged care and healthcare increases, while Australia’s tax base shrinks,” Treasury said.
Migrants tend to be younger, work more, contribute more in taxes and be less of a drain on the federal budget.
Treasury said Australians benefited from migration through higher economic growth, more job creation, improved wages and productivity.
“There can also be fiscal benefits to migration,” it said. “However, these need to be weighed against pressures such as those on housing, through a well-calibrated migration system.”
Deaths rise due to pandemic
Australia has the fourth-highest life expectancy among advanced countries, behind Japan, Switzerland and South Korea.
However, Treasury said continued excess mortality from the pandemic had temporarily reduced life expectancy for the second consecutive year, for the first time since the 1960s.
Life expectancy decreased by 0.2 years for men and 0.3 years for women from the peak to 81.1 years for men and 85.1 for women, although this is better than most countries because of higher vaccination rates in Australia.
The population statement showed that compared with the general average, life expectancy for First Nations people was 8.8 years lower for men and 8.1 years lower for women.
Retirement Living Council executive director Daniel Gannon said Australians were living longer, but the appropriate health, housing and aged care initiatives were not in place to cope with the incoming silver tsunami.
“Age-friendly housing supply, gold-plated health systems and innovative home care solutions have never been more crucial for our country,” Mr Gannon said. （John Kehoe）
