Australian households may become smaller in the coming decades, but people are expected to live longer, according to the latest long-term economic forecast from the government. The Treasury’s updated intergenerational report, which will be fully released on Monday, outlines how government policies may shape the nation’s future over the next 40 years. A summary released on Sunday indicated that life expectancy at birth for women is projected to rise to nearly 90 years by 2065/66, up from about 86 years today. For men, the forecast is an increase to 86 years, from 82 years currently. The improvement in life expectancy is largely attributed to Australia’s universal healthcare system and advances in medical research, according to Treasurer Jim Chalmers. He emphasized the need to continue investing in programs such as Medicare, the Pharmaceutical Benefits Scheme, and new urgent care clinics to support this trend. However, he also warned that an aging population will place significant pressure on the nation’s long-term budget. Despite these challenges, Chalmers described the report as “not pessimistic,” noting that Australia is “better placed and better prepared” to handle the changes ahead. Population growth is expected to slow significantly in the coming decades. The report predicts that by the mid-2060s, Australia’s population will be about 1.8 million people lower than previously estimated in the 2023 version of the report. Growth is projected to average 0.9% annually over the next 40 years, down from 1.4% in the previous four decades. This slowdown is largely due to declining fertility rates, with fewer women choosing to have three or more children. Chalmers noted that many of these changes reflect women having children later in life. To support families, the government has introduced policies such as childcare subsidies, extended parental leave, and increased superannuation contributions. Despite these demographic shifts, the report highlights a more optimistic economic outlook. Future government debt is expected to decrease by half a trillion dollars compared to earlier forecasts, largely due to the potential benefits of emerging technologies like artificial intelligence. Chalmers acknowledged that while the financial outlook is improving, there remains “lots, lots more work to do” to manage the pressures and risks ahead. He emphasized the importance of keeping pace with global technological advancements to ensure Australia can fully benefit from the productivity gains AI could bring.