Australia has warned that deaths could outnumber births for the first time in the 2060s, highlighting the long-term economic pressures posed by an ageing population, falling birth rates and slower immigration.

Treasury made the projection in its Intergenerational Report on Monday, which examines the major changes expected to shape Australia’s economy over the next four decades.

The report identified artificial intelligence, geopolitical fragmentation, the energy transition, population ageing and the shift towards a service-based economy as the five most significant transformations facing the country.

Australia’s population growth is now expected to slow to 0.9% a year over the next four decades, down from an average annual increase of 1.4% over the past 40 years.

The decline is expected to be driven by falling fertility rates and a reduction in net overseas migration, before migration levels eventually stabilise.

“For ⁠the first time, deaths are projected to outnumber births by the 2060s,” Treasurer Jim Chalmers said in a speech.

“The number of Australians over 85 will triple by 2066, putting further demand on health services.”

Australia has relied on immigration for decades to sustain population growth as birth rates remained low. But with immigration slowing, the country is moving towards a demographic pattern already seen in several advanced economies, including Japan, Germany and South Korea.

The report warned that an ageing population would increase demand for care services and could worsen labour shortages in regions with older populations.

Healthcare and aged care could face particular pressure because both sectors rely heavily on migrant workers.

The projections come as Prime Minister Anthony Albanese’s Labor government tightens immigration rules.

The government introduced the changes as Albanese faces growing support for the right-wing populist One Nation party, which has pledged to sharply reduce immigration.

Albanese’s approval rating also fell this week to its lowest level since he became prime minister in 2022.

The report further flagged the possibility of tax cuts in future budgets as the government continues to provide cost-of-living relief to Australians facing elevated inflation, higher mortgage rates and expensive housing. (Arise News)