Population projections
The seventh Intergenerational Report (IGR) was released this week, which threw out its usual projections for the next 40 years.
Shane Oliver of AMP charted in colour-coded fashion the population projections of the various IGRs since 2002, which shows how population growth accelerated through the mining boom years.
It's interesting to note that today's estimated resident population of 28.1 million is already considerably higher than anything conceived in the 2002 IGR all the way out until 2042.
Source: Shane Oliver, AMP, Intergenerational Report data
The latest projections see the population rising to 39.3 million by 2066, even as the fertility rate declines.
Reported the IGR:
"Over the next 40 years, population growth is projected to be increasingly concentrated in
Australia’s major capital cities, driven by patterns of net overseas migration.
This trend is
broadly similar to what was observed in the 2023 IGR, but the gap between capital cities
and regional areas has widened. Capital cities are projected to grow over twice as fast as
the rest of Australia".
The report noted that some regional areas will grow materially, while others won't - it's not expected to be a uniform trend.
Most young new migrants are expected to head for the capital cities, slowing the ageing of the population in the larger conurbations.
Life expectancy is expected to continue increasing to 86.1 years for males and 89.5 years for females.
The ageing of the population nationally means that the number of Aussies aged over 65 will approximately double, and the number aged over 85 will roughly triple.
Australia's open economic model is founded upon the principles of the 3Ps: population, participation, and productivity.
Generally speaking, new migrants are young and increase the participation rate and the tax take - although migrants do grow older themselves, of course - and indeed forecasts have been upgraded, with participation expected to increase until 2040, particularly for females, and for older workers in the 'knowledge economy'.
However, it's clearly been the case that Australia has relied upon population far more so than lacklustre productivity over the past decade.
Looking ahead, productivity gains are expected to be realised from the boom in AI over the next 40 years.
This was probably the most contentious part of the report: how will AI impact the economy, and when and how will productivity gains materialise?
The report also mentions delivering 'cheaper energy', but...well, let's not go down that rabbit hole today!
In real terms, the economy is expected to be about twice the size of today 40 years from now, while real per capita income is expected to increase by about 55 per cent.
The report says that more Australians need to be encouraged into home ownership, to assist with productivity, intergenerational equity, and prosperous retirement.
Unlike many developed nations, the Aussies don't have a major government debt problem - the fiscal position has improved notably since the 2023 report, with gross debt expected to glide lower to around 22 per cent of GDP by the 2050s.
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