Treasurer Jim Chalmers has released the Australian government’s seventh Intergenerational Report, calling artificial intelligence the “most consequential new emphasis since the 2023 report and the biggest economic transformation of our lifetime”.
“The productivity, investment and labour market impacts of AI will be dramatic,” Chalmers told the media today in Canberra.
“The IGR shows that from 2030 onwards, each extra 0.1 per cent of productivity growth from AI could improve the bottom line by 0.7 percentage points and reduce gross debt by 0.3 percentage points within a decade.”
The Treasurer was bullish on the technology's potential, but warned that focus would be necessary to realise its benefits.
“We are well positioned with Australians adopting AI at a higher rate than almost every G20 country, but the productivity boost from AI depends on translating that into better ways of working,” Chalmers said.
The AI revolution is one of six key transitions facing the nation and the generations that will live in it. Growing geopolitical tensions, the clean energy transition, an ageing population, intergenerational equity, and industrial changes are all covered in the more than 300-page document.
“There’s no separating these five accelerating shifts from each other or from their consequences for our budget or our economy,” Chalmers said.
“A smaller workforce means a proportionately smaller income tax base at a time when pressures on social services and tools of statecraft, including defence, will be growing, not easing, along with the fiscal risks of climate change and more frequent disasters.”
According to the report, AI will be a “defining influence” on Australia’s economy over the next few decades, with adoption already accelerating rapidly.
Impacts on labour are to be expected, but the impacts are expected to be uneven.
“While some tasks will be automated using AI, demand for labour is expected to increase in other areas – including tasks that can be performed to a higher standard by workers equipped with AI tools,” the report says.
“Many jobs will be redesigned to realise these benefits, with the tasks that can be automated unbundled from other parts of roles that require human coordination, judgement and relationships.”
The economic benefits of AI, and chip production in particular, are already bearing fruit, with countries like South Korea and Taiwan seeing economic growth not seen in decades. The Australian impacts, the report contends, are already being seen, with Treasury estimating that Australia’s data centre pipeline could bring in more than $150 billion in investment by 2030.
As an aside, the report fails to consider that the companies making frontier AI models are yet to see a profit. The potential for the AI bubble to burst is simply not considered in Treasury’s outlook. Nonetheless, the government sees many benefits in being a part of the global AI supply chain.
“Contributing specialised capabilities to global AI value chains will support Australia to capture value from the growing market for AI products and services,” the report says.
“Developing distinctive intellectual property and specialised products that complement technologies produced around the world will also equip Australia with the technical expertise and trade partnerships required to adopt AI in sophisticated ways across the economy, supporting broad-based productivity improvements.”
You can read the full report here.
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