Australia is projected to have almost 40 million people by 2066, but the country is also expected to have a much older population, fewer births and growing pressure on housing, health spending and working-age taxpayers.
The outlook comes from the federal government’s 2026 Intergenerational Report, which models how Australia’s population, economy and living standards could change over the next 40 years.
A larger but older population
The report projects Australia’s population will reach about 39.3 million by 2066, lower than the projection in the previous intergenerational report. Births are expected to decline relative to the size of the population, while longer life expectancy will contribute to a growing number of older Australians.
For the first time, Treasury projects deaths will outnumber births during the 2060s. The fertility rate is forecast to fall from 1.44 babies per woman to 1.34 by 2066, while the number of people aged over 85 is expected to roughly triple.
This demographic shift is expected to increase pressure on health services and government budgets. Health expenditure is projected to rise from about 4{0931a9b6576c5d87fe846c236d3725957ace4ff7894c2ecd00b9029ccfe6a5f9} of GDP in 2026 to 6.2{0931a9b6576c5d87fe846c236d3725957ace4ff7894c2ecd00b9029ccfe6a5f9} in 2066, with ageing accounting for part of the increase.
This follows the demographic trends examined in Australia’s previous coverage of falling fertility and the ageing population.
What about wealth?
The report forecasts household wealth and wages to continue rising over the long term, with productivity growth supporting living standards. However, it says younger generations could experience smaller gains than previous generations.
Superannuation is expected to play a larger role in retirement. Treasury projects the median superannuation balance for people aged 65 to 69 to rise from $204,000 in 2024 to $450,000 over the medium term, before inflation is taken into account.
Housing remains a major issue
The report highlights housing affordability as an important source of intergenerational inequality. It estimates that around 250,000 additional people aged 25 to 34 would currently own a home if home ownership rates had remained at their 1981 level.
Treasury also notes that investor lending has largely been directed towards existing housing rather than new construction, adding to the broader debate about affordability and supply.
AI and the future of work
Artificial intelligence is expected to have major economic and social effects by 2066. Treasury says AI could increase productivity by automating some tasks, although its ultimate impact will depend on how the technology develops and how widely it is adopted.
The report also identifies risks including misinformation, scams and malicious cyber operations. It says Australia’s energy, land and water resources could place the country in a position to benefit from the growth of AI if the technology is managed effectively.
Climate change and health
The long-term effects of climate change remain uncertain, according to the report. Treasury modelling indicates that higher temperatures could reduce worker productivity, affect agricultural yields and create additional pressures on cities and infrastructure.
Australia is also expected to continue expanding renewable energy, with rooftop solar and battery storage playing an important role in the energy transition.
A changing workforce
More older Australians and women are expected to participate in the workforce, while the ageing population is projected to reduce the overall share of people of working age. Continued migration is expected to support workforce growth and help offset some of the demographic pressure.
The report presents 2066 as a very different Australia: larger in population, older in age, more reliant on superannuation and increasingly shaped by artificial intelligence, climate change and changes in housing affordability.
Source: The Guardian
