Key facts
- Australia's fertility rate is currently around 1.5 children per woman.
Australia's intergenerational report projects a future where migration is crucial for economic growth and funding an aging population, countering anti-migration sentiment. The report forecasts a decline in fertility rates and a rise in the dependency ratio, underscoring the need for overseas talent to maintain living standards and fiscal stability.
The report's findings underscore the economic necessity of migration for Australia to maintain living standards and fiscal health amidst a declining birth rate and an aging population, directly impacting budget deficits and national debt.
Australia's seventh intergenerational report (IGR) highlights the critical role of migration in sustaining economic growth and managing an aging population, directly challenging anti-migration sentiments. The report, released by Treasury, projects a future where declining fertility rates will necessitate attracting overseas workers to support the economy and fund social services.
The report notes that Australia's fertility rate has been below the 2.1 children per woman needed for population stability for 50 years, currently standing at approximately 1.5. Projections indicate this rate could fall to 1.34 over the next four decades, leading to a scenario by the mid-2060s where deaths are expected to exceed births. Treasurer Jim Chalmers has stated the government will not interfere with personal decisions regarding family size.
The IGR's baseline forecast assumes a net overseas migration (Nom) of 235,000 people annually. Under this scenario, real GDP per person is expected to increase from $99,200 in the current financial year to $157,300 in 40 years. However, a lower population scenario, with Nom at 50,000 fewer per year and a fertility rate of 1.24, projects real GDP per person to be $400 lower in 2065-66.
The impact on the dependency ratio, which measures the number of elderly people relative to the working-age population, is also stark. This ratio is projected to rise from 27.4 in 2025-26 to 40 by the mid-2060s. A lower migration scenario would push this figure to 43. This demographic shift has significant implications for the budget, with the projected underlying cash deficit increasing and gross debt as a share of GDP rising by nearly 10 percentage points under the lower population growth scenario.
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