The $400 reason a smaller Australia may not be much poorer

Australian living standards would not collapse if population growth targets are not met in the future, Treasury forecasts predict, with households revealed to be just a few hundred dollars worse off even with a drastically different size.

The difference between a high migration and a low migration scenario in the next 40 years, may only pan out to affect GDP per capita by about $400, the figures state.

However, experts caution that governments will need to make "tough decisions" around funding if fewer migrants were to arrive in the country, as a shrinking tax base would have to support a growing dependent population of retirees.

Some of the government's political opponents have cited the results of the Intergenerational Report (IGR) to claim that migration levels need to be cut further than current government projections.

Published by the federal government every three years since 2002, the IGR outlines Australia's economic and budgetary outlook over the next 40 years.

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The forecasts in the reports are predictions, some of which have fallen far off the mark, such as the first report projecting that Australia's population would reach 25 million in 2042 — a milestone reached 24 years earlier in 2018.

Its release comes amid an ongoing public debate over optimal net overseas migration figures, which the Coalition and One Nation parties argue should be reduced.

Treasurer Jim Chalmers has defended the government's forecast that annual migration to Australia will drop to 225,000 people by 2028.

He said migration is "a force for good in our economy and in our society".

"We will continue to make the case for getting that net overseas migration down in the most responsible way, that balances all of the key considerations in our economy and in local communities," Chalmers told the ABC's 7.30 program on Monday.

While fewer people in the country may alleviate some structural pressures on housing, infrastructure, and public services, Dr Liz Allen, senior lecturer in demography at the Australian National University, told SBS News that migration cannot be separated from its broader impacts on society.

"There's no optimal population size. That's just the reality," she said. "We need to look at what's going on underneath."

Data in the IGR, released on Monday, shows that under a low migration scenario of 185,000 annually, GDP per capita would shrink by just $400 in 2066, compared with the baseline assumption of 235,000.