The population is ageing and we’re having fewer babies. Labor should keep that in mind as the migration debate rages.
The fertility rate is about 1.5 now and the IGR projects it will drop to 1.34 over the coming 40 years.
Fair enough, but the seventh IGR tells a familiar story that Australians are, on average, getting older – and this has big implications for the economy and the budget.
Maintaining a healthy migration program has helped Australia overcome these structural challenges.
For those who think we would be better off with less migration, Treasury’s analysis provides some evidence that the opposite is true.
The IGR’s “baseline forecast” assumes a long-run net overseas migration (Nom) figure of 235,000 people a year.
Treasury economists then ran the numbers under a lower population scenario, where Nom was 50,000 a year less, and where the long-run fertility rate was 1.24, instead of 1.34.
Under this scenario, real GDP per person would be $400 lower in 2065-66 than under the baseline.
In 2025-26, there will be 27.4 people aged 65 and over for every 100 working-age Australians. The IGR projects this ratio will soar to 40 by the mid-2060s; with lower migration it reaches 43.
The projected underlying cash deficit with lower population growth is 2.4% in 2065-66, instead of 1.8% under the existing assumptions.
Gross debt as a share of GDP is nearly 10 percentage points higher, at 32.2%.