Emanuel Datt
The government released the Intergenerational Report 2026 offering the outlook for the Australian economy and the budget to 2065–66.
Emanuel Datt, chief investment officer of Datt Capital says “A 40-year forecast is a list of guesses. The task is to sort them by the strength of the evidence. Demographics come first. Everyone who will be over 85 in 2066 is already alive. Their number is set to triple to 1.9 million. Demand for aged care and health services is as close to certain as forecasts allow. The supply of beds, staff and well placed sites is tight and slow to grow. Owners of scarce assets tend to benefit.
“Population maths is simple. Fertility has stayed below the replacement rate of 2.1 for over 50 years. It is set to fall from 1.48 to 1.34. By the 2060s, deaths will outnumber births. From then on, migration will drive all growth. The question is who should come. The answer is young, skilled workers. The median migrant is 26, compared with 38 for the rest of the country. Skilled arrivals in their twenties add to the workforce and tax base for forty years. They lift output per person and the total headcount. Choosing migrants by skills and age is the clearest way to shape both population and GDP. It only works if housing and infrastructure keep up. That is a supply problem to fix, not a reason to cut numbers.
“The AI forecasts need more scepticism. The better debt outlook relies on long-term productivity growth of 1.2 per cent a year, with AI expected to deliver much of it. That may happen, but Australia’s recent record does not support it. What we see now is that AI uses large amounts of energy, data-centre space and key minerals. Australia supplies all three.
“We would also be cautious about expecting tax cuts. The report still shows budget deficits for the next 40 years. Many companies most exposed to these trends are small caps on the ASX. They now trade at the widest gap relative to large caps in 20 years.”