The Australian Government has today released its latest Intergenerational Report, outlining the long-term economic and demographic pressures Australia faces over the next 40 years. An RMIT expert explains the key takeaways.
Dr Meg Elkins, School of Economics, Finance and Marketing:
“There is a pattern of optimism bias in long-term economic forecasting. Every Intergenerational Report since 2002 has leaned on productivity assumptions that proved too rosy. The 2023 reduction in projected productivity growth, from 1.5 to 1.2 per cent, wiped out roughly 9.5 per cent of the projected size of the economy by 2063.
“Fiscal drag, not tax cuts, is the real story. Tax brackets aren’t indexed to inflation, so wage growth gradually pushes people into higher marginal rates without any new legislation. This quietly funds rising public sector spending while allowing governments to claim credit for cuts.
“Longer lives require better planning, but most Australians are unprepared. The report projects life expectancy will reach 86 years for men and almost 90 years for women by 2066. Most people underestimate how long their retirement savings need to last, while default superannuation settings assume planning behaviour most people don’t demonstrate.
“Australia’s fertility decline is a policy challenge. The fertility rate is forecast to fall from 1.48 to 1.34 births per woman by 2066, and has remained below replacement level for 50 years already. Migration has been the default fix, but that defers the underlying question rather than answering it.
“Debt is the figure the tax-cut narrative struggles to explain. Gross federal debt passed one trillion dollars in August 2026. Providing tax relief alongside climbing debt isn’t a shrinking state, it’s one borrowing to cover the gap.”
Associate Professor Meg Elkins is a cultural and behavioural economist whose research focuses on those on the economic fringes and community wellbeing.
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