Today I'm releasing the Albanese Government's second Intergenerational Report, which shows the pace of change is accelerating and intensifying globally and here at home.
The IGR shows the risks to our economy and the pressures on our budget are serious, but our advantages as Australians are substantial.
The report confirms Australia is better placed and better prepared to deal with rapid change than most countries, but despite our advantages we cannot be complacent.
This IGR's projections show that in 2066, Australians are expected to live longer, healthier lives, with higher living standards and more secure retirements.
At the same time, families will have fewer kids, the population will grow more slowly and our industries will be transformed by artificial intelligence (AI) and clean energy.
Advances in AI represent the most dramatic change since the last IGR in 2023 and we're acting now to maximise the opportunities and minimise the serious risks it presents.
The IGR details the five major transitions underway in the global economy and their profound implications for our economy, our budget and our society.
- AI is developing rapidly and will be a defining influence on the economy over the next 40 years.
- Geopolitical fragmentation is increasing as conflict and competition have flared and broadened.
- The energy transition is becoming more important and urgent.
- The population is ageing more quickly, accelerated by falling fertility rates.
- Australia's industrial base is evolving further towards services, influenced by AI and the other major transitions.
Against this backdrop, concerns about intergenerational inequality have deepened, particularly when it comes to housing, and democracies are being disrupted.
Despite volatile global conditions, the Australian economy has outperformed other advanced economies in recent years. Over the next 40 years, the economy is projected to be more than twice its current size and income per capita 55 per cent higher by 2065-66.
Since the 2023 IGR, the fiscal outlook has improved and debt and government spending are lower as a percentage of GDP. This reflects the Government's actions to address the fastest growing fiscal pressures, including reforms to the NDIS and aged care.
The underlying cash balance (UCB) is projected to improve over the medium term, to a deficit of 0.3 per cent of GDP in 2036-37, then widen over the long term to reach a deficit of 1.8 per cent of GDP in 2065-66. This is an improvement of 1.2 percentage points of GDP in 2062-63, compared to the 2023 IGR.
Gross debt as a share of GDP is projected to decline to 22.2 per cent in the mid‑2050s before increasing to 27.4 per cent by 2065-66. This is an improvement of 7.2 percentage points of GDP in 2062-63, compared to the 2023 IGR.
We know there's much more to do to capitalise on the opportunities ahead and deal with the serious challenges and risks coming at us from around the world.
That's why the Albanese Government has an ambitious reform agenda to ensure Australians benefit from these shifts now and over the next 40 years.
The report makes the case for our reforms to boost productivity and resilience, cut taxes for workers, help more Australians into home ownership, strengthen superannuation and improve the budget, as well as our cost of living relief and investments in better services.
This is all about making current and future generations of Australians the beneficiaries, not victims, of the changes outlined in this IGR.
The 2026 Intergenerational Report is available on the Treasury website.
