The Stats Guy: Updated population projections show us Australia’s future
Australia keeps running out of workers, while a relatively small cohort enters the workforce, writes our resident Stats Guy.
Let me open with a big claim – today I present you the single-most significant chart if you want to study the mid-term future of Australia.
Understanding this chart is of the utmost importance for anyone in business or government.
That’s a rather grandiose opening to a column, but let me back up my claim after I explain what the chart actually shows.
We are looking at the latest population forecast by age for Australia from The Centre for Population.
What data, from whom?
The Centre for Population is a small analytical unit within Treasury that acts as the federal government’s in-house demography team.
It doesn’t run the census or collect raw data, but it interprets it, builds population projections and provides the assumptions that quietly underpin infrastructure planning, housing targets and long-term budget forecasts.
Its annual Population Statement is essentially the government’s official demographic outlook.
The 2025 edition sets out how many people Australia is expected to have, where they will live, how fast we will age and what migration and birth rate assumptions sit behind those numbers. It’s the spreadsheet behind Australia’s growth story.
The almighty 10-year population forecast chart
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Let me show you the 10-year population forecast chart in all its glory first. It’s nothing but a simplified population pyramid – I previously explained why I prefer this style.
Australia is projected to grow by 13 per cent, or 3.5 million people, in the coming decade. That level of growth shouldn’t surprise anyone as it’s pretty much what we’ve seen in the past decade and a half.
To come up with population forecasts on a national level, you need to forecast how many people will die, how many babies will be born, and how many migrants will come in and out of the country in net terms.
I think the Centre for Population got its death and migration assumptions right, but I question its birth data.
Fertility rates
Australia’s birth rate (sitting at 1.48) is rather surprisingly projected to edge back to 1.62 within the next five years.
The Centre for Population argues in a separate paper that fertility will increase not because families suddenly want more children, but because of recuperation, the demographic catch-up effect.
Many women are delaying their first and second child into their 30s and early 40s due to longer education, career building and housing pressures.
The modelling assumes a large share of these postponed births are shifted rather than cancelled.
Combine that with improving reproductive technology, healthier later-life fertility and a still comparatively family-supportive policy environment, and the result is a modest rebound into the “moderately low” fertility band rather than a baby boom or a collapse into ultra-low Southern European territory.
Personally, I find this rebound scenario rather optimistic and would expect a continued fall of fertility that is much in line with historic Australian trends and peer nations.
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I would expect only slightly more babies in 2036 than we have now. The 24 per cent uplift in babies by 2036 that the Centre predicts would seriously surprise me – let’s check back in with my predictions in five years.
The certainty of death
On the deaths side, the Centre for Population starts with the ABS pre-pandemic life tables and then layers on future improvements using advice from the Australian Government Actuary.
The big shift this year is a slightly more cautious view of how fast we will keep living longer.
The exceptional longevity gains enjoyed by people born between 1930 and 1950 are not expected to repeat, so projected life-expectancy growth has been trimmed a little.
We are still getting older, just not quite as quickly as previously assumed. Covid effects are also being dialled back. Temporary “excess death” uplifts remain in the next few years, mainly for those over 50, but they are smaller than last year’s estimates and are assumed to disappear entirely by the late 2020s.
In short, Australians are still expected to live longer but not just as much as we assumed a little while ago. I agree with these assumptions.
Net overseas migration
Now to the hot topic of migration. The Centre for Population builds its net overseas migration forecasts from detailed ABS arrival and departure data, supplements them with Home Affairs visa statistics and adjusts for known gaps between border crossings and true migration outcomes.
From the late 2020s onward, the model gradually shifts from recent trends back to long-run norms, ultimately assuming annual net migration of 235,000 people – that’s the same assumptions used in the 2021 Intergenerational Report.
Age, sex and geographic patterns are largely based on pre-pandemic averages, with state and capital city shares phased back toward historical distributions rather than extrapolating the unusual post-Covid spikes.
We are seeing a reversion to the mean. These assumptions align with my thinking about future migration numbers.
As I argued in previous columns, Australia keeps running out of workers as the large baby boomer cohort retires, while a relatively small cohort enters the workforce at the other end of the age spectrum.
What does it mean for Australia?
Next week we will explore what the projected population changes mean for Australia. Spoiler alert: There is a lot of bad news hiding in this innocent-looking chart (high interest rates, a prolonged skills shortage, poverty in old age) but also opportunities for consumption-based businesses.
I apologise for this cliff-hanger ending to this column and look forward to telling you more about the forecasts next week.
Simon Kuestenmacher is a co-founder of The Demographics Group. His columns, media commentary and public speaking focus on current socio-demographic trends and how these impact Australia. His podcast, Demographics Decoded, explores the world through the demographic lens. Follow Simon on Twitter (X), Facebook, or LinkedIn.
