Australia’s 2026 Intergenerational Report hinges on productivity rebound amid demographic pressures

  • Treasury’s Seventh Intergenerational Report projects 1.2% annual productivity growth, while deaths are expected to exceed births in the 2060s.
  • A downside productivity scenario would leave gross national income per person at A$129,800 in 2065-66 versus A$149,500 under the baseline.
  • Health and aged-care spending is projected to reach 9.7% of GDP by 2065-66, as ageing, migration, labour shortages and political fragmentation pressure Australia’s outlook.

Treasury’s Seventh Intergenerational Report, released by Treasurer Jim Chalmers at the Australian National University, presents a 40-year forecast in which productivity growth accelerates to 1.2% annually from an average 0.3% over the past decade, more than doubling real economic output and lifting per-capita income 55%. Independent economists questioned whether artificial intelligence can overcome shortages of housing and cheap energy. Under a downside case of 0.8% productivity growth, gross national income per person would reach A$129,800 in 2065-66 instead of A$149,500 under the baseline, creating an annual gap of about A$20,000. The report forecasts deaths will exceed births for the first time in the 2060s, average population growth will slow to 0.9% from 1.4% over the past 40 years, and net overseas migration will fall before stabilising. Government spending is projected to reach 27.7% of GDP by 2065-66, with health and aged-care costs rising to 9.7% of GDP. The report is intended as a non-partisan platform for debate, but political fragmentation is intensifying: polling cited by POLITICO indicates 52% of Australians would vote for neither Labor nor the Coalition, while only 26% believe the country is moving in the right direction.

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