Australia’s government is counting on artificial intelligence as one of the forces that could support the country’s economic growth over the next 40 years. Bloomberg reports that the view is set out in the Treasury’s published “Intergenerational Report 2026.”
The report says the spread and adoption of artificial intelligence will likely help deliver the 1.2% annual labour productivity growth built into the long-term forecast. The same assumption was also used in the 2023 report.
Australian Treasurer Jim Chalmers, presenting the report at the Australian National University, said the country’s advantages in the 2010s — China’s demand for commodities, education and tourism — are likely to be replaced by new strengths. He pointed to renewable energy and critical minerals, strong institutions and strategic partnerships, as well as new advantages in services created through the use of artificial intelligence.
After the speech, Chalmers was asked why the Treasury had kept its productivity growth assumption at that level. He replied that the actual outcome could be higher, but that the 1.2% forecast appeared to be a balanced baseline for the department.
The report also highlights the role of data centre construction as a visible growth factor for the Australian economy. According to Westpac Banking Corp., the boom could be comparable in scale to the expansion of the liquefied natural gas sector in the early 2010s.
At the same time, rapid data centre development could worsen shortages of resources and production capacity in the short term. Those constraints have already added to inflation pressures and forced the Reserve Bank of Australia to raise interest rates, the report indicates.
According to the “Intergenerational Report 2026,” Australia’s average annual economic growth rate will slow to 2% by the mid-2060s, compared with 3% over the previous 40 years.
