A richer Australia in 2066 – but for who?
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What does the Intergenerational Report say about Australia’s wealth by 2066?
I'm Ruby Jones and you're listening to seven AM. Australia in 2066 will be older, richer and according to the Treasurer, transformed by artificial intelligence.
The AI revolution is the most consequential new emphasis since the 2023 report and the biggest economic transformation of our lifetime.
The latest intergenerational report says despite an aging population, our real incomes will be 55% higher by 2066. And Jim Chalmers says AI will get us there.
Australia has positioned itself early and well.
But the same report says younger Australians aren't seeing the same gains in income, wealth, and home ownership as the generations before it. So, what does this report really say about our future, and how much of it is political, wishful thinking? Today, Vice-Chancellor's professor and chief societal economist at the University of New South Wales, Richard Holden, on what Australia could look like in 40 years and where the economics end.
It's Tuesday, September twenty two. Richard, when you first read this report, what story did you think that it was trying to tell us about Australia's future?
Well, I think it was trying to tell a pretty upbeat story about Australia's future. I think it read a little bit like a press release. There are a lot of very familiar themes that the government's been emphasizing for several years now. It seemed very familiar. So it looked like a report that was less bottom up from Treasury doing modeling and more crafted with a top-down narrative with analysis to support it. But it tells a fairly Optimistic future uh about the next four decades for Australia.
Well, let's talk more about what it's saying about the future for young people, because there is this number in the report that claims that Australians will be fifty-five percent richer per person in forty years' time. Can we interrogate that a little?
How realistic is the claim that younger Australians will be 55% richer in 40 years?
Are our next generation really likely to be that much better off?
Well that sounds like a lot, but it's over forty years. And, you know, another way you could say it is if productivity growth was more at the levels that it was in uh the late nineteen eighties, the nineteen nineties, then instead of being fifty-five percent better off, they'd be like two or three times better off. So really a lot better off, as much as three times better off. So Very small numbers compounded for a really long time adds up to, you know, seemingly large numbers. So it sounds like a lot, but we've expected better in the past.
And the report does note the period of transition that we're in right now and the instability that we face in terms of the political environment, technology. Jim Chalmers he opened his speech talking about AI and calling that potentially the biggest economic transformation of our lifetimes. So what is the social and economic impact of AI predicted to be?
Well, AI is pretty central to the productivity forecast, which really drives a lot of the GDP uh growth forecast. The GDP per capita. Now that's forecast to be one point two percent on average over the four decades. Now over our last decade, that number's been zero. So it's requiring a step up kind of starting now. And the way Treasury's thought about that is about half of that one point two percent a year coming from AI. And that's certainly possible. I mean, I agree that AI is a transformational once in a multi-generation technology. The real question is how Australia goes about capturing those benefits. And of course, that's speculative and that doesn't just depend on government.
What role does AI play in the projected productivity and GDP growth?
It depends very much on the private sector, you know, reorganizing their whole operations uh around AI and that will take a lot of work. But it's a very, very important component of the optimistic story that the IGR tells.
Mm, which does sort of beg the question though, that when it comes to delivering productivity, how much of what is in this report is actual modelling and and how much of this is is hope?
There's some hopium being smoked, uh, in the report for sure. And i while it's fair and the treasurer emphasized this in his remarks, yeah, it said no economists would bet their life on something, you know, four decades out.
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Chapters
8 chapters
1
What does the Intergenerational Report say about Australia’s wealth by 2066?
0:01–2:17
2
How realistic is the claim that younger Australians will be 55% richer in 40 years?
2:17–4:05
3
What role does AI play in the projected productivity and GDP growth?
4:05–6:06
4
How much of the report’s outlook is based on modelling versus optimism (“hopium”)?
6:06–7:45
5
Why did the original Intergenerational Report focus on ageing, fertility and immigration?
7:45–9:46
6
What major economic shocks have the report failed to incorporate?
9:46–11:03
7
How can future reports be made more independent and transparent?
11:03–12:55
8
Why have bold economic reforms been missing from Australia’s policy agenda?
12:55–13:51
Speakers
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