Australians can expect to lead longer, healthier lives with fewer responsibilities.

The good news stops there, according to a new report on demographic trends that finds Australia’s economy is seriously unprepared for its coming twilight years.

The number of Australians aged over 65 will more than double, and those aged over 85 will triple in numbers, according to a Treasury forecast of the economy in 2063, the Intergenerational Report, to be published on Thursday.

The big question

That poses a big question: Who will care for all these Australians in our ageing nation?

Aged care services will have to become a much larger part of Australia’s future economy.

Today, the aged care sector makes up about 8 per cent of Australia’s economic output; by 2063, it is on track to grow to 15 per cent.

“This would continue strong growth in care employment, with the number of care workers having more than doubled over the last 20 years and estimated to double again over the next 40 years,” the report finds.

That will require a significant investment in securing a larger workforce while technological advances could aid standards of care, the report finds.

‘Prominent shifts’

“Growth in the care economy is set to be one of the most prominent shifts in our society over the next 40 years,” said Treasurer Jim Chalmers.

“Building a more adaptable, inclusive and better-trained workforce will be even more important given the big shifts in our economy and population over the next 40 years.”

The government has funded a 15 per cent pay rise for aged care workers at about $11 billion over the next four years.

“This report shows the need for sustainable and equitable funding in aged care to meet the requirements of an ageing population,” said Aged Care Minister Anika Wells.

“The Albanese Government has already formed an Aged Care Taskforce to address the sector’s financial sustainability and help older Australians have access to safe and dignified care now and into the future.”

A 2021 royal commission report found widespread neglect in aged care.

Migration and population

Population growth will plummet to an average of 1.1 per cent over the next 40 years compared to 1.4 per cent for the past 40 years, its lowest-ever point over such a period.

Australia will be home to fewer children as birth rates fall and relatively fewer migrants, whose contribution to future population growth will fall from 1 per cent today to 0.6 per cent.

The report finds that Australia’s population is projected to reach 40.5 million in 2062-63.

It assumes the level of net overseas migration will remain fixed at its current level of 235,000 people a year over the long term.

On current forecasts, cumulative net overseas migration will not catch up to pre-pandemic levels until 2029-30.