Intergenerational Report says AI will be ‘a defining influence’ on Australia’s economy over next 40 years

Artificial intelligence (AI) will be “a defining influence” on Australia’s economy over the next 40 years, according to the Intergenerational Report (IGR) released by Treasurer Jim Chalmers on Monday.

Australia is also expected to experience lower growth, a decline in the birth rate and unending budget deficits.

As Prime Minister Anthony Albanese makes AI a central issue of discussion during his current trip to the United States, the IGR emphasises the precise nature of the new technology’s impact will depend on how extensively it is adopted and Australia’s position in global supply chains.

This means the estimates of AI’s potential to boost productivity vary widely, the report says.

The IGR, the first since 2023, presents a mixed picture for Australians in the four decades ahead.

It emphasises a more fraught and turbulent world and an ageing population exacerbating budgetary pressures.

On the other hand, it argues Australia is well placed to deal with the difficult challenges it will face.

The report, prepared by the Treasury, also has an overtly political streak.

For example, it declares the government’s “ambitious reform agenda is all about […] ensuring Australians can be the beneficiaries” of change.

It also canvasses the initiatives in the recent budget.

Launching the report, Chalmers said “the economy of the next 40 years will be built with AI-enabled services, smarter technologies, new clean industries powered by cheaper energy, and more secure partnerships in the world”.

He said the government took responsibility for getting “policy and planning right” and “the pressures in this report make all of our longer-term reforms even more important”.

He laid out ten key government priorities: making productivity a whole-of-government priority harnessing AI in the national interest building an adaptable, well-trained workforce attracting talent through skilled migration rebalancing the tax system to support workers helping more Australians into housing making retirement more secure delivering cleaner and cheaper energy boosting national resilience improving budget sustainability By the mid-2060s, in real terms, the Australian economy is projected to be more than twice as large as it is now.

Per capita income is projected to be 55% higher, the IGR says.