Australia's economy is expected to more than double in the next four decades but its growth will slow, partly due to an ageing population, according to an extract from the intergenerational report.
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The report, to be released in full on Thursday by Treasurer Jim Chalmers, projects that Australia's population will climb to 40.5 million in 2062-63, a growth that will generate a bigger labour market over the coming decades.
But a slower growing and an ageing population will impact economic growth, with the country's gross domestic product forecast to increase at a rate of 2.2 per cent a year for the next 40 years.
"That is 0.9 percentage points lower than the average growth of the past 40 years," the report states.
"Similar to the projections in past [intergenerational reports], this reflects lower projected population growth and reduced participation as the population ages, along with an assumption of slower long-run productivity growth.
"While the pace of growth is projected to slow, the Australian economy is expected to be around two-and-a-half times larger in 2062-63 than in 2022-23, in real terms."
Dr Chalmers said Australia's economy was "one of the best placed economies to respond to challenges and opportunities ahead of us".
"Our economy continues to grow but our future prosperity depends on our ability to revitalise productivity growth, deliver high quality essential services and ensure we have a sustainable budget position," Dr Chalmers said in a statement.
"To lay the foundations for future growth, we're investing in a more adaptable workforce and working to maximise opportunities in the digital economy, net zero transformation and growth in the care economy."
The report further projects that over the next decade, federal government income, which includes tax and other sources of revenue, would rise to 26.3 per cent of GDP.
This is tipped as a result of low unemployment, higher wages and strong commodity prices.
But that's expected to fall to 26 per cent by 2062-63.
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The report projects that "indirect sources of revenue" from commodities like tobacco and fuel will fall as a result of changing consumer habits and the decarbonisation of the transport industry.
The government will rely on GST and other taxes to uphold economic growth, with income tax expected to help make up a larger share of GDP.
Government income from tax will grow to 24.4 per cent of GDP in 2033-34 and remain at the rate until 2062-63.
The report emphasises that the projections don't take into account policy changes that could be made by future governments.
Dr Chalmers will speak on the report at the National Press Club on Thursday.
Natalie Vikhrov
Natalie Vikhrov reports on federal politics and public service for The Canberra Times. Prior to this, she spent several years covering human rights in Eastern Europe, including Russia's invasion of Ukraine. Get in touch via natalie.vikhrov@austcommunitymedia.com.au.
Natalie Vikhrov reports on federal politics and public service for The Canberra Times. Prior to this, she spent several years covering human rights in Eastern Europe, including Russia's invasion of Ukraine. Get in touch via natalie.vikhrov@austcommunitymedia.com.au.
