Income tax cuts previously flagged for 2017 are off the table and are unlikely to be granted for another six years as federal government revenues continue to lag behind their pre-global financial crisis levels.

It means a growing number of average income earners will find their way into the second-top tax bracket of 37 cents in every dollar earned between $80,001 – $180,000 due to "bracket creep".

The news is among a series of sobering projections contained in Treasurer Joe Hockey's Intergenerational Report which shows debt and deficit ballooning alarmingly in future years unless major structural savings already proposed but blocked in the Senate are agreed to.

Economists say the danger of achieving fiscal repair through bracket creep is that it has a dampening effect on demand as disposable incomes shrink and and thus becomes counter-productive quite quickly.

The report, the fourth in the five-yearly series, is predicated on the heroic assumption of continued steady growth for another four decades after an already record run of continuous growth over the last 24 years.

It shows Australia's population is ageing, its rate of economic growth falling anyway, and the burden for future prosperity falling increasingly on women and the elderly.

The long-anticipated Treasury telescope, which Mr Hockey described as "a call to arms" warns the nation's future living standards turn on improving performance of the three "Ps" of population, participation, and productivity.

It predicts marginally slower economic growth to 2054-55 (2.8 per cent) than has been the case in the past four decades (3.1 per cent) coupled with a massive spike in the number of people living past 100, and a doubling of the number of people in the over 65 category.

While the government has not committed to a further hike in the age pension eligibility age – often erroneously called the retirement age – the report's projections of a shrinking workforce, as a proportion of the wider population it supports, means there will continue to be pressure to lift the age from 67 set by Labor, to 70 and perhaps beyond, if it can get it through the Senate.

"The number of centenarians is an extraordinary story," Mr Hockey said in releasing the report.

"There are only 100 in 1971, there's going to be 40,000 in 2050.

"There will be fewer people aged between 15 and 64 relative to each person aged over 65.

"Sixty-five is the traditional working age, obviously that is changing, but in 1970 there were the equivalent of 7.5 people for everyone aged over 65. It's currently 4.5 and it's dropping to nearly three."

He said older workers had remained in the workforce even through the GFC because their income from investments had been hit, helping to achieve high levels of older workers still.

"This is the grey army that is going to deliver prosperity in Australia's future and we need older Australians, we want older Australians if they choose to do so to remain in the workforce and to come back into the work force," he said.

The report says tax cuts to curb bracket creep - that is, income earners moving up into the next tax bracket through wage inflation – will be pushed back to 2021 or later when tax revenue as a proportion of GDP returns to the pre-global financial crisis level of 23.9 per cent.

But Mr Hockey held out a carrot to Labor and the crossbench parties, telling them if all of the government's proposed budget repair measures including lower pension indexation and reduced family supplements were passed then "of course" the government would look to deliver tax breaks earlier.

"We have to give tax breaks to Australians otherwise, if we don't give them those tax breaks, then it starts to constrain the wealth production in the nation," he said.

In Parliament Labor attacked the report as a political document while pointing to a graph which showed the government's proposed lower rate of indexation – a change the government insists is not an actual cut – will make the pension more affordable.

Despite the Coalition's low standing, Mr Hockey committed the government to serious economic reform policies including in taxation and industrial relations at the 2016 election while also admitting his first budget "did bite off too much".

The report finds the national population will reach nearly 39.7 million by 2054-55, even as the rate of growth slows, while net overseas migration is expected to remain around 215,000 people annually and the number of people aged over 65 will double.

The average life expectancy of an Australian woman born in 2055 will reach 96.6 years, up from 93.6 in 2015, while a man born in 2055 will on average live until he is 95.1 years, up from 91.5 years.

It sets out a doomsday scenario of ballooning debt that would have reached 122 per cent of GDP under Labor's policy settings, and warns that under current policy settings, net debt will instead reach 60 per cent of GDP - $2609 billion in today's dollars.

Net debt is projected to reach 60 per cent of GDP by 2054-55 under current policy settings while spending will rise to 31.2 per cent of GDP.

Labor's treasury spokesman Chris Bowen accused Mr Hockey of using the report for political purposes, rather than lifting the tone of political debate in Australia.

"The previous policy that this document refers to is not the policy of the previous Labor government. The previous policy in this document is from the mid-year economic forecast which the Treasurer himself brought down, including $14 billion of extra spending, including $9 billion to the Reserve Bank, the doubling of the deficit," he said.

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