The COVID-19 pandemic has wiped more than one million people from Australia's 10-year population forecasts.
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The population will be around four per cent smaller than expected in a decade due to the slowdown in migration due to COVID-related restrictions, as well as a blip in the fertility rate.
Record-low migration during the pandemic will also feed into a lower birth rate as there will be fewer migrants to have children.
Still, the snapshot of Australia's population shows the nation's ranks swelling from 26 million to 29.9 million by 2032/33.
But Treasurer Jim Chalmers said the news that Australia's population would be slightly smaller and older was concerning, especially in the context of the trend towards an ageing population.
"As the economy recovers from the worst of the pandemic, crippling skills and labour shortages are holding our businesses and our economy back," he said.
Dr Chalmers said the government was tackling the workforce shortages on multiple fronts, including allowing parents to work more, training Australians to fill skills gaps and improving the migration program.
ACT independent senator David Pocock raised concerns about the inequities caused by an ageing population and the burden felt by younger generations.
He said the government should reconsider the design of the stage-three tax cuts in light of the new population data.
The legislated tax changes, due to begin in 2024, will lower the 32.5 per cent and 37 per cent marginal tax rates to 30 per cent and flatten the tax structure for people earning between $45,000 and $200,000.
The cuts are expected to cost the budget about a quarter of a trillion dollars.
"Intergenerational wealth disparity is growing," Senator Pocock said.
"We need a long-term plan to address it, together with how we fund the services our community relies on from Medicare to the pension, Austudy and support for the most vulnerable.
Separately, the treasurer is looking to overhaul the Productivity Commission, the independent body tasked with advising the government on productivity-enhancing measures.
Australia's productivity growth, a key driver of better living standards, has slowed over the past decade, a trend seen across most developed nations.
Dr Chalmers said he wanted to broaden the scope of the commission while maintaining a sharp focus on productivity.
He said the reforms were not about refreshing the leadership despite the chair, Michael Brennan, approaching the end of his term in the middle of the year.
"This is not about any one person, it's not about a set of commissioners necessarily, it's about the institution itself," Dr Chalmers said.
Australian Associated Press
