Australia’s 2065 longevity forecast comes with a smaller population

A longer life, a smaller household

The new intergenerational report, due in full on Monday, assesses how government policy could shape Australia over the next four decades. Its demographic baseline is straightforward: people will live longer, but fewer children will be born.

Treasury expects population growth to average 0.9% a year over the next 40 years, down from 1.4% over the previous four decades. By 2065/66, the population is projected to reach 39.3 million.

The change in life expectancy is more striking:

Chalmers attributed the gains primarily to Australia’s universal healthcare system and medical research. He said the forecast supported further investment in Medicare, the Pharmaceutical Benefits Scheme and recently opened urgent-care clinics.

Fertility is moving in the opposite direction. Chalmers said almost half of the decline is explained by fewer people having a third or subsequent child, reflecting the later age at which mothers are having children.

The government’s response includes:

The budget depends on productivity

The new forecast puts future government debt half a trillion dollars below the estimate in the 2023 report. That improves the fiscal picture, but it does not remove the underlying strain: a larger share of the population will be older and living longer.

Chalmers said some parts of the report might look alarming, but argued that it was not pessimistic. Australians, he said, are better prepared for accelerating change and remain in a favourable position.

That confidence increasingly depends on technology. Earlier Treasury recommendations said AI could materially raise productivity across the public and private sectors if Australia does not fall behind the global shift toward it. Chalmers called AI a central factor in the country’s future while also saying the government intended to minimise its substantial risks.

I think the forecast’s most revealing tension is between the headline improvement in longevity and the quieter question of what those extra years will cost. A longer-lived population is a social achievement, but it also extends the period in which healthcare, retirement and public services must be funded. The excerpt points to that pressure without explaining how the gains from AI would be distributed or how quickly they would arrive.

Australia wants a seat at the rules table

The domestic forecast is arriving as Prime Minister Anthony Albanese prepares to visit the United States this week to discuss global rules for AI adoption.

Albanese has urged the two largest players, the US and China, to act in humanity’s interests. In an interview with ABC’s Insiders, he said he hoped the countries could cooperate and pointed to international agreements and protocols that have helped regulate earlier technologies, including the Treaty on the Non-Proliferation of Nuclear Weapons.

He also argued that Australia and other middle powers should participate in shaping those rules.

The announcement is quiet about the practical form that participation would take. It is clearer about the diplomatic ambition than about the country’s leverage, especially as Australia’s own long-term outlook increasingly relies on technology developed and governed elsewhere.

Donald Trump said he would appoint an AI overseer overnight and create an “AI Force” to monitor the technology, but provided few details. He called concerns about AI “deception”.

Australia’s forecast therefore ties its future to two forces it does not fully control: demographic ageing at home and the pace, distribution and governance of AI abroad.