Australia in 2066: Treasury Report Warns of Aging Population, Housing Crisis, and Economic Shifts

Demographic Shifts and an Aging Population

By the 2060s, Australia’s fertility rate is expected to decline to 1.34 babies per woman, down from 1.44, while the median age climbs to 45. According to the Treasury report, deaths will begin to outnumber births within that decade. Life expectancy is projected to increase to 89.5 years for women and 86.1 years for men, causing the number of Australians aged over 85 to triple.

While the overall share of working-age people will shrink due to these demographic trends, Australia’s working-age population is still expected to grow, bolstered by ongoing migration. This trajectory places Australia in a stronger position than many Organisation for Economic Co-operation and Development (OECD) countries facing sharp population declines.

Economic Growth, Productivity, and Household Wealth

The Treasury report forecasts the Australian economy to grow by an average of 2 percent a year, making it 2.25 times larger by the 2060s. Real incomes are projected to rise by 55 percent, and household wealth will continue to climb, though younger generations will experience smaller financial gains compared with older cohorts.

Economic growth will rely on a projected productivity growth rate of 1.2 percent annually.

Superannuation balances are set to rise substantially over the medium term. For Australians aged 65 to 69, the median superannuation balance is projected to increase from $204,000 in 2024 to $450,000 in unadjusted figures over the next decade. Consequently, government spending on the aged pension is expected to fall from 2.3 percent to 1.8 percent of GDP by 2066, while superannuation drawdowns will rise to nearly 6 percent of GDP.

Housing Affordability and Intergenerational Inequality

Housing affordability remains a central challenge, with declining access deepening intergenerational inequality. The Treasury report notes that if homeownership rates had remained at 1981 levels, an additional 250,000 people aged 25 to 34 would currently own property. Tax concessions, including negative gearing and capital gains tax discounts, have contributed to this strain. Treasury estimates indicate that between 80 percent and 90 percent of investor housing lending has targeted existing housing stock rather than new builds since 2019.

Technology and Climate Impacts

Artificial intelligence will generate profound economic and social changes, according to the Treasury, delivering productivity gains by automating routine tasks. The report warns, however, that widespread adoption will require managing risks related to misinformation, scams, and cyber operations. Concurrently, demand from AI data centers is projected to make up nearly 10 percent of the National Electricity Market by 2050.

Climate factors will also weigh on public finances and resources. Crop yields are projected to fall by 3.6 percent, and natural disaster spending is expected to triple. At the same time, the transition away from fossil fuels will reduce coal production by 71 percent by 2050, while electric vehicle adoption will halve fuel excise revenue.