Australia’s migration debate meets a changing population

Published: 21 September 2026. The English Chronicle Desk. The English Chronicle Online.

Australia’s debate over migration is increasingly being shaped by concerns about population growth, housing, infrastructure and pressure on public services. But the country’s long-term demographic outlook presents another side of the discussion. Australia is getting older, fertility rates are falling and the number of people entering the workforce relative to those reaching retirement age is expected to decline significantly over coming decades.

The newly released 2026 Intergenerational Report, prepared by the Australian Treasury, projects the economic and fiscal outlook over the next 40 years. The report identifies population ageing and falling fertility among the major structural changes that will shape Australia’s economy, government finances and demand for public services through to 2065–66.

One of the most important demographic indicators is Australia’s fertility rate. A fertility rate of around 2.1 children per woman is generally considered the replacement level at which a population can maintain its size over the long term without migration, although actual population outcomes also depend on mortality and the age structure of the population. Australia has remained below that level for decades.

The latest long-term projections point to an even lower fertility rate. The 2026 Intergenerational Report assumes fertility will decline from around 1.5 children per woman today to approximately 1.34 over the longer term. As a result, Treasury expects the natural increase in Australia’s population to weaken substantially, with deaths eventually exceeding births.

The demographic shift has important economic consequences. When fewer children are born and people live longer, the population gradually becomes older. That changes the balance between the number of people working and paying taxes and the number of people who are retired or require greater spending on healthcare, aged care and other services.

Treasury’s projections show how significant that change could become. In 2025–26, there are expected to be about 27.4 people aged 65 and over for every 100 working-age Australians. By the middle of the 2060s, the ratio is projected to rise to around 40 under the report’s baseline assumptions. In a scenario involving lower migration and lower fertility, the ratio reaches about 43.

This does not mean migration is the only answer to Australia’s ageing problem. Migrants themselves grow older over time, and migration cannot permanently eliminate the effects of low fertility. However, migration can influence the age structure and size of the population because migrants are often of working age when they arrive. Earlier Treasury analysis has also found that overseas migration can slow the pace of population ageing because migrants tend to be younger than the resident population.

The 2026 report therefore uses a long-run net overseas migration assumption of 235,000 people a year in its baseline projection. Treasury uses this assumption to model the economy and public finances rather than presenting it as a guaranteed future migration intake. Actual migration outcomes will depend on future government policy, economic conditions and international movements.

The economic implications become clearer when Treasury compares the baseline with a lower-population scenario. Under the alternative scenario, net overseas migration is 50,000 people a year lower than the baseline and the long-run fertility assumption is also reduced. The modelling shows that real GDP per person would be around $400 lower in 2065–66 than under the baseline scenario. The difference is relatively modest on an individual basis, but the broader fiscal consequences are more substantial.

Government finances are particularly sensitive to demographic change because an ageing population can increase spending pressures while the share of the population in the traditional working-age group declines. Healthcare and aged care are among the areas expected to face growing demand as the population ages.

Treasury’s lower-population scenario projects an underlying cash deficit of about 2.4 per cent of GDP in 2065–66, compared with 1.8 per cent under the baseline assumptions. Gross debt is also projected to be higher under the lower-population scenario, reaching about 32.2 per cent of GDP compared with 27.4 per cent under the baseline.

These figures do not establish that higher migration is automatically beneficial in every respect. Population growth can create pressures of its own, particularly if housing construction, transport infrastructure, healthcare capacity and other services do not expand alongside population. Questions about the appropriate size, composition and pace of migration therefore remain matters of public policy and political debate.

The demographic data, however, show why the issue cannot be considered only through the immediate pressures associated with population growth. Australia must also consider what happens when the country has a progressively older population and a smaller proportion of people of working age.

The housing question is especially important in this debate. Rapid population growth can increase demand for homes, while inadequate housing supply can contribute to affordability pressures. At the same time, restricting population growth does not by itself resolve structural housing problems. Planning rules, construction capacity, infrastructure investment, land availability, interest rates and the distribution of population growth can all affect housing outcomes.

Australia’s policymakers also face a separate question over fertility. Treasury’s latest projections show that fewer Australians are having children, but the government has indicated that decisions about whether and when to have children are deeply personal. Treasurer Jim Chalmers has said the government does not intend to provide personal advice to Australians about how many children they should have.

Instead, government policy has focused on measures intended to reduce some of the practical costs associated with raising children. Earlier population policy announcements have included expanded paid parental leave and changes to early childhood education and care. The government has also acknowledged that birth rates are at historically low levels and that population ageing is becoming a more important economic issue.

The migration debate is therefore taking place against a demographic background that is changing independently of political arguments. Even if fertility were to recover, it would take many years before larger numbers of newborns became part of the labour force. Migration can have a more immediate effect on the size and age structure of the working population, although its economic contribution also depends on migrants’ skills, employment, productivity and participation.

The 2026 Intergenerational Report also makes clear that migration is only one part of a much larger economic picture. Australia is simultaneously confronting technological change, artificial intelligence, the energy transition, geopolitical fragmentation and changes in the structure of industry. Treasury expects the economy to more than double in size over the next 40 years, with income per person projected to be substantially higher by 2065–66, but it also identifies significant long-term fiscal and demographic pressures.

For Labor, as well as for future Australian governments, the challenge is therefore more complicated than simply deciding whether migration should rise or fall. The country must balance population growth with housing supply, infrastructure, productivity, employment, public services and community expectations while preparing for a much older population.

The latest Treasury projections do not settle that political debate. They do, however, provide a clear picture of one of the central constraints facing Australia over the next four decades: the country is moving towards lower fertility, slower natural population growth and a substantially older population. Migration can alter the speed and scale of those changes, but it cannot replace the need for broader economic and social policies.

As Australia’s migration debate continues, the long-term demographic numbers are likely to remain an important part of the discussion. The question is not simply how many people Australia should admit in any particular year, but how population policy fits into the country’s wider strategy for sustaining economic growth, public services and living standards as generations change.