NSW is set to become almost totally dependent on overseas migration for its population growth over the next 40 years, according to a new state government report that predicts the population will reach 12 million people by 2065-66.
The Minns Labor Government has released the 2026-27 NSW Intergenerational Report, published every five years to examine how demographic, economic and fiscal trends could shape the state over the next four decades.
Net overseas migration is projected to add 3.6 million people to NSW by 2065-66, more than the entire 3.4 million net population increase the report forecasts, offsetting a projected net loss of 1,000,000 people to interstate migration and a fast-slowing rate of natural increase.
Natural increase, meaning births outnumbering deaths, made up 64 per cent of the state’s population growth back in 1984-85. Today that figure has fallen to 26 per cent, and the report expects it to fall further, to just 10 per cent, by 2065-66. Overseas arrivals have swung wildly in the meantime, from a net loss of 7,300 people in 2020-21 during the pandemic border closures to a surge of 178,000 in 2022-23 as arrivals rebounded.
The report found migrants arriving in NSW tend to be younger, with an average age of 26 compared to 40 for the general population, and better educated, with more than 40 per cent holding a tertiary qualification, compared to under 30 per cent of the Australian-born population. That combination is doing heavy lifting for the economy, with the report crediting comparatively strong migration for moderating the effects of an ageing population and boosting the workforce, helping NSW grow faster than most other advanced economies are expected to over the same period.
Even so, the share of people aged 65 and over is still projected to rise from 18 per cent today to 25 per cent by 2065-66, adding pressure to housing needs and public services.
On the state’s finances, the report found the long-term fiscal gap has narrowed from 2.6 per cent of gross state product in the 2021-22 report to just 0.1 per cent, with gross debt stabilising at around 20 per cent of GSP over the forward estimates period. Over the full 40-year horizon, however, gross debt is projected to climb to 89.9 per cent of GSP by 2065-66, a lower trajectory than the 133 per cent projected in the 2021-22 report, but still a substantial rise from 19.4 per cent today. Real GSP per person is projected to grow by 35 per cent over the next 40 years, from around $97,000 to $131,000 in 2023-24 dollars.
On housing, Treasury modelling found easing density constraints further over the next 40 years, rather than reverting to 2021 settings, could cut housing costs per square metre by around 24 per cent and deliver benefits equivalent to about $8,400 in extra annual income for the average household.
Treasurer Daniel Mookhey said the improvements reflected the government’s approach.
“Improvements in the Intergenerational Report reflect our strategy of relief and reform,” Mr Mookhey said.
“The State’s outlook is far better now than it was five years ago under the Coalition.”
“While our disciplined approach of paying down debt and responsibly managing expense growth is having an impact, this report shows there’s still more work to be done.”
The report drew a mixed response. Property Council NSW Executive Director Katie Stevenson welcomed the government’s support for housing density but warned planning reform alone would not fix the housing crisis.
“Planning capacity is not the same as housing delivery. A rezoning doesn’t become a home unless the project is feasible, financed, serviced and able to move into construction,” Ms Stevenson said.
“NSW can’t tax its way to prosperity and the best response to the challenges identified in this report is to make it easier for businesses to invest, build and create jobs.”
Shadow Treasurer Scott Farlow was more critical, pointing to NSW’s population already exceeding earlier projections by 228,000 people on the back of migration, straining housing supply, alongside productivity growth being revised down from 1.2 to 0.8 per cent a year.
“The 2026-27 Intergenerational Report is sobering reading for the people of NSW, and it shows that things aren’t as rosy as Treasurer Mookhey would have you believe,” said Scott Farlow, Shadow Treasurer and Shadow Minister for the Hunter.
The report’s projections are prepared on a no-policy-change basis, illustrating what could occur if current settings remained unchanged, and are intended to give governments time to plan and respond to emerging pressures.
The full 2026-27 NSW Intergenerational Report is available at https://www.nsw.gov.au/departments-and-agencies/nsw-treasury/documents-library/2026-27-nsw-intergenerational-report.
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