Australia's 2026 Intergenerational Report puts productivity and ageing at the centre

Observed facts: growth slows as the population ages

The 2026 Intergenerational Report (IGR), the seventh in the series and released by the Treasurer on 21 September 2026, projects the Australian economy and the Commonwealth budget to 2065-66. Treasury projects the economy to be more than twice its current size and real income per person 55 per cent higher by 2065-66, but on a slower path than the past four decades: average annual real GDP growth of 2 per cent, against 3 per cent over the previous 40 years [1].

The demographic assumptions do much of the work. Treasury assumes population growth of 0.9 per cent a year over the next 40 years, down from 1.4 per cent, and long-term labour productivity growth of 1.2 per cent a year. Labour force participation is projected to peak at 67.7 per cent in 2039-40, and life expectancy by 2065-66 is projected at 89.5 years for women and 86.1 years for men. The 85-and-over cohort is expected to triple, and deaths are projected to outnumber births by the 2060s - the first time an IGR has forecast that [1].

• Real GDP growth of 2 per cent a year is assumed over 40 years, below the 3 per cent of the past 40 [1].
• Population growth is assumed to slow to 0.9 per cent a year from 1.4 per cent [1].

Observed facts: the fiscal position improves but does not close

Since the 2023 IGR the fiscal outlook has improved. Treasury projects the underlying cash balance to strengthen over the medium term to a deficit of 0.3 per cent of GDP in 2036-37, then widen over the long term to a deficit of 1.8 per cent of GDP in 2065-66. That is an improvement of 1.2 percentage points of GDP by 2062-63 relative to the 2023 report [1][2].

Gross debt is projected to fall from 33.1 per cent of GDP in 2025-26 to a low of 22.2 per cent in the mid-2050s, before rising to 27.4 per cent by 2065-66 - 7.2 percentage points of GDP lower in 2062-63 than the 2023 IGR. Payments are projected to rise to 27.7 per cent of GDP over the period, while tax receipts reach a historical high of 24.2 per cent of GDP in 2032-33 and are assumed to remain there [1]. The Treasurer attributes part of the improvement to reforms to the NDIS and aged care [2].

• Underlying cash balance: deficit of 0.3 per cent of GDP in 2036-37 widening to 1.8 per cent by 2065-66 [1].
• Gross debt peaks lower than in 2023 but is projected to reach 27.4 per cent of GDP by 2065-66 [1].

Observed facts: five transitions now frame the outlook

The 2026 IGR organises its long-run analysis around five major transitions: artificial intelligence, geopolitical fragmentation, the energy transition, population ageing, and the continued shift of Australia's industrial base towards services. Treasury describes AI as the most dramatic change since the 2023 report and as a defining influence on the economy over the next 40 years [1][2].

Those transitions are not only qualitative. Treasury links the energy transition to the electricity system, noting the rising renewable share of the grid and projecting that data centres could account for almost 10 per cent of the National Electricity Market by 2050. On retirement incomes, the median superannuation balance for people aged 65-69 is projected to rise from $204,000 in 2024 to approach $450,000 by the end of the medium term, with drawdowns rising to almost 6 per cent of GDP by 2065-66 [1].

• Five named transitions: AI, geopolitical fragmentation, the energy transition, ageing, and the shift towards services [1][2].
• Data centres could reach almost 10 per cent of the National Electricity Market by 2050 [1].

The same test is being run at the state level

The Commonwealth projection is not the only official long-run view. The 2026-27 NSW Intergenerational Report, published by NSW Treasury on 27 August 2026, projects NSW's population to reach 12 million by 2065-66, with 25 per cent of people aged 65 or over, up from 18 per cent today. It projects gross state product per person to rise by 35 per cent over 40 years, and finds a smaller fiscal gap than earlier state reports even as rising expenditure pressures keep fiscal sustainability a live issue [3].

Current official demography already shows the starting point. The Australian Bureau of Statistics reported Australia's population at 27,921,150 at 31 March 2026, with annual growth of 1.4 per cent, annual natural increase of 100,600 and net overseas migration of 292,100. Net overseas migration for 2024-25 was 306,000, down from 429,000 a year earlier, and life expectancy at birth was 81.1 years for males and 85.1 years for females in 2022-2024 [4]. The Centre for Population's 2025 Population Statement, the sixth in its annual series, treats migration, fertility and mortality as the drivers of that outlook [5].

• NSW projects 12 million people by 2065-66 and a 35 per cent rise in gross state product per person [3].
• Australia's population was 27.9 million at 31 March 2026, growing 1.4 per cent over the year [4].

Oakhampton inference: treat the IGR as a planning baseline

Oakhampton's reading is that the IGR is best used as a published planning baseline rather than a forecast. It gives a single, government-authored set of long-run assumptions - slower population growth, modest productivity growth, an older population and a structurally larger services and care economy - that asset, infrastructure, workforce and financing decisions can be tested against. The value is in the consistency of the assumptions, not the precision of any single number [1][3].

Practically, that argues for naming the IGR's assumptions explicitly when a business case depends on long-dated demand: population and participation for labour and housing, the energy and data-centre paths for infrastructure load, and the ageing and care projections for service demand. Where a project's economics assume a return to the 3 per cent growth of the past 40 years, the IGR provides an official reason to re-test that assumption rather than let it pass unexamined [1]. This is an operating inference from published material, not advice on any specific investment.

• Reference the IGR's stated assumptions when a case depends on long-dated demand or workforce supply.
• Re-test any economics that assume a return to the 3 per cent growth of the previous 40 years.
• Treat the report as a checkable baseline to revise as new official data is released, not a settled forecast.

Remaining uncertainty

The IGR is a projection under stated assumptions, not a prediction, and Treasury frames it that way. Small changes to fertility, migration, productivity or participation compound over 40 years, and the report itself notes that its projections have shifted between vintages. The improvement in the fiscal position relative to 2023 also depends on policy settings, including the assumed reforms, being maintained [1][2].

The national and state reports are not directly comparable. NSW's fiscal-gap and gross-state-product measures sit alongside, not inside, the Commonwealth framework, and their assumptions are scoped differently [1][3]. The current ABS estimates describe the population now rather than the population in 2065-66 [4]. The practical conclusion is that the IGR is a documented, checkable set of assumptions to plan against and to revise as new official data arrives - not a settled statement of what will happen.