More Australians will die than be born by 2060s as major government report lays bare lower growth future

Seventh intergenerational report outlines how Australia is at cusp of new and uncertain age of artificial intelligence

There will be more Australians dying than being born in 40 years’ time, according to the government’s latest intergenerational report, which lays bare the fundamental challenges of managing an ageing population at a time of rapid change and lower economic growth.

The country’s seventh IGR also outlines how Australia is at the cusp of a new and uncertain age of artificial intelligence that will shape the economy and society over the coming four decades.

Jim Chalmers, in a speech at the Australian National University to coincide with the release of the analysis, said “this intergenerational report illuminates the road ahead”.

“No previous IGR has contended with global challenges this great, with politics this fraught, or a future less certain. The global and generational risks are serious, but Australia’s opportunities are endless,” the treasurer said.

The latest 40-year projections show the population will keep getting older as people have fewer children, to the point where falling fertility rates mean deaths are for the first time projected to outnumber births by the 2060s.

“This is a milestone that many advanced economies have already surpassed, including Japan, Germany, Italy and the Republic of Korea, with most of the rest expected to do so over coming decades,” the report says.

With the population set to grow by 0.9% for the foreseeable future, versus 1.4% historically, alongside a shrinking share of working Australians to support activity and the budget, the IGR predicts the economy has entered into a new normal of lower growth.

Living standards will still improve, but not as quickly as in the past, the IGR shows.

Real GDP on a per person basis will expand by about 1.2% over the next 40 years, down from 1.5% in the previous four decades, the IGR shows.

Even that relatively dour outlook depends on productivity picking back up from virtually zero in recent years to the historical average of 1.2% - an assumption that leans heavily on AI, or what Chalmers described as “the biggest economic transformation of our lifetime”.

“The rise and adoption of AI is likely to support the achievement of Treasury’s long-term labour productivity growth assumption over time,” the report says, while the treasurer described its role as “pivotal”.

“As a medium-sized economy, Australia’s productivity performance will depend on adopting innovation, supporting investment, developing skills and delivering regulatory reforms that improve the efficient operation of the economy,” the report said.

The forecasts underline the tightrope the government must walk between protecting Australians from the worst aspects of the new technology, and not stifling a technology that could almost single-handedly drive future prosperity.