Intergenerational Report Paints Grim Future for Families as Labor Offers Problems as Solutions
The Treasury's own modelling confirms that Australia's birth rate is collapsing faster than officials predicted just three years ago and the Albanese Government's response is to double down on the very policies driving it down, while quietly letting support for families dwindle.
A Collapsing Birth Rate
According to the 2026 Intergenerational Report (IGR), Australia's total fertility rate, already sitting well below the replacement level of 2.1 children per woman, is now projected to fall to 1.34 children per woman by 2065–66. That's dramatically worse than the 1.62 the Treasury was still assuming only three years ago in 2023. The last time Australia had the replacement level fertility rate of 2.1 was 1975, over 50 years ago. In just one budget cycle, the outlook for Australian families got significantly bleaker, and the government is doing nothing to change the trajectory.
The Treasury even points to where this road leads if nothing changes: China, Japan and South Korea have had fertility rates below replacement for decades, and by 2024 all three had tipped into outright population decline. The report calls some countries' fertility levels "difficult to reverse." Australia isn't there yet, but on the Treasury's own numbers, we're heading in exactly that direction.
Fewer Children Today Means Heavier Burdens on Future Generations
This is a direct hit to every working Australian family. The report projects the population aged 65 and over will grow by 87% by 2062–63, while the population aged 0 to 20 grows by just 10%. The over-85 cohort is set to triple. The old-age dependency ratio, the number of people 65-plus for every 100 working-age Australians, is projected to jump from 27 to 40 by 2065–66.
Someone has to pay for this. The report is explicit that working-age Australians will carry the burden of the growing cost of pensions, health and aged care. This burden will get even worse as fewer children are being born to eventually take their place in the workforce. Aged care is already the single biggest driver of spending growth for the over-85s. Families are being asked to fund an ageing Australia with fewer children of their own, a burden that only compounds every year the birth rate keeps falling.
The Treasury Already Knows What's Driving Families Away From Having Children
To its credit, the report doesn't dodge the causes. It names career establishment, delayed partnership formation and the rising cost of raising children as key drivers of the decline, and it's upfront that nearly half of the projected fall in the birth rate comes from fewer women having a third child rather than fewer women not having children. This is a story about larger families being squeezed out, as well as first-time parents delaying.
The report frames lower fertility as "associated with higher female participation rates", as if fewer children were the acceptable cost of a bigger workforce, rather than a crisis for the families who wanted more children and couldn't afford to have them. The IGR describes the factors leading to lower fertility rates but says little about how they could be significantly improved.
Labor's Answer: More of the Very Things Causing the Crisis
The Treasury's own chapter on "positioning Australia for the future" centres on exactly two levers: getting more people, especially mothers, into paid work; and permanent mass migration, locked in at 235,000 people a year, indefinitely. The government aims to push women's labour supply up by 900,000 hours a week. Nowhere in the government's actual policy response is there a serious commitment to making it easier for a family to survive on one income or make it easier to have more children.
And on the money families can actually expect: the report's own projections show income support and family assistance payments (excluding the Age Pension) falling from 3.4% of GDP today to just 2.6% by 2065–66. This means that the offsets for raising children are shrinking, as the cost of raising children keeps climbing. The Treasury also mentions that "cash payments alone have limited impact on fertility rates", which seems to be cover for government to not put any real money behind families.
Worse still, permanent mass migration isn't a neutral fix, and it can actively work against fertility rates. Research into the 1980 immigration surge into Miami found that when a sudden wave of migrants pushed up local rents, fertility among renters fell measurably in the years that followed. That's not a hypothetical for Australia. The IGR that locks in 235,000 migrants a year also admits housing prices have risen 400% since 1999, more than double income growth, and that the time needed to save a deposit has blown out from 7.1 to 11.2 years. Labor is pursuing a migration-heavy fix to an ageing population while doing nothing to stop that same policy from making housing, and therefore children, even less affordable for young Australians.
The Fix Other Countries Are Already Using and Australia Isn't
There is a proven alternative model, and Australia is one of the only developed countries not using it. Under France's "quotient familial" tax system, a household's income is divided by the number of family members that favours families with three or more children. A larger family pays significantly less tax on the same income than a smaller one, and the benefit grows sharply for third and subsequent children, precisely the births the Treasury says Australia is losing fastest.
It shows in the numbers. France's total fertility rate was 1.62 children per woman in 2024, the second-highest in the entire European Union, comfortably above the EU average of 1.34, despite years of decline. Australia's tax and payment system does nothing comparable: Australians are taxed as individuals rather than households, despite the fact that most welfare payments are means tested based on household income rather than individual income.
You can see exactly what income splitting would mean for your own family using our free calculator here.
What You Can Do Now
Labor's Intergenerational Report proves the fertility crisis is real and getting worse, and that the government's own plan will make it worse still. Families deserve a tax system that rewards them for raising children, not one that quietly punishes stay-at-home parents while funneling money into schemes that don't address the real problem.
Sign our petition calling on the government to introduce income splitting and replace the childcare subsidy with a universal child payment.
Last updated: 23 September 2026 02:48