Can Australia afford the future?; rate hike on the way; BYD cut-price EVs
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What does the new Intergenerational Report say about Australia’s future wealth and living standards?
Welcome to Fear and Greed, Business News You Can News. Today the government's intergenerational report promises a bigger, wealthier Australia, but paying for living standards we've come to expect will get much harder. All the big bank economists are now expecting a rate hike in a week's time, and Bridget Bardot's belongings go up for sale. Plus, an inquiry calls for an overhaul of the triple zero regime, and BYD cuts the The price of its entry version EV, making it the cheapest new car on the market. It is Tuesday, the 22nd of September, 2026. I'm Michael Thompson and good morning to you, Adam Lang. Good morning, Michael. Sean Aylmer away just for today. He'll be back tomorrow. But Adam, what a day to be on the show because there is so much to discuss just in the main story alone.
Australia will be bigger, older, and wealthier in 40 years' time. But the latest intergenerational report released yesterday makes clear that maintaining our living standards and And really, just paying for the services that we expect is going to become much harder. The stats here are quite incredible. Australia's population is forecast to rise from 28 million to almost 40 million by 2066. But population growth will slow. Fertility is expected to fall to just 1.34 children per woman, and deaths will eventually outnumber birth. At the same time, the number of Australians aged over 85 will triple to 1.9 million. That is triple to 1.9 million. It's a very familiar story. We've seen this play out in other countries like Japan, right?
But it means that it will have more spending on hospitals and aged care and proportionally fewer workers to help pay for it. The result Is essentially a structural budget problem.
How will an ageing population and slower fertility affect government spending and taxes?
Government spending is projected to rise from 26.6% of GDP today to 27.7%, with the budget remaining in deficit. Throughout the entire forty year forecast, Adam.
Yeah, Michael, and as you describe it, health and aged care are the biggest pressures. Defense, the NDIS, and interest payments also become much more expensive, although pension spending actually falls as superannuation does more of the heavy lifting. There's also a problem on the revenue side, Michael. Fuel excise will shrink as electric vehicles take over, while tobacco excise is also declining. That leaves the budget increasingly dependent on personal income tax, and that is potentially putting more of the burden on workers.
Yeah, and I mean th these are looking forty years ahead, these forecasts, but i things like the tobacco excise, we are already seeing that playing out right now. The the biggest variable you'd have to say in this entire report though, Adam, is productivity. And its importance to Australia's long term prosperity is very, very clear. Treasury assumes, when you look through this, Treasury assumes productivity growth of 1.2% a year, despite the fact that Australia is only managing around 0.8% over the past two decades. Now, that small difference between 1.2% and 0.8% becomes enormous when compounded over the next 40 years. And and It's probably demonstrated best with the some of the numbers here because if Treasury's 1.2% assumption is right, real GDP per person reaches about $157,000 by 2066.
But if productivity stays at 0.8%, which is what it's been for the last 20 years, it reaches just 137,000 compared to 157,000. And it isn't just about kind of household living standards. Under that, the weaker productivity scenario, government spending climbs about uh above 30% of GDP. The budget deficit blows out to 4.2% of GDP. Gross federal debt reaches almost 56% of GDP. If you get productivity up to 1.6%, meanwhile, the budget deficit disappears. Most government debt It makes a big difference.
Simple, right? Productivity is the answer. Right.
Why is productivity growth the key factor in Australia’s long‑term fiscal health?
So that explains the government's enormous hopes for artificial intelligence. Treasury sees artificial intelligence as potentially a transformative productivity tool, but Australians using ChatGPT or Claude isn't enough on its own. Businesses need to use the technology to produce more with the same workers and capital.
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Chapters
8 chapters
1
What does the new Intergenerational Report say about Australia’s future wealth and living standards?
0:06–2:02
2
How will an ageing population and slower fertility affect government spending and taxes?
2:02–4:34
3
Why is productivity growth the key factor in Australia’s long‑term fiscal health?
4:34–6:42
4
When is the Reserve Bank expected to raise interest rates and what could it mean for borrowers?
6:42–9:05
5
What reforms are being proposed for the Triple Zero emergency‑call system?
9:05–11:39
6
How did BYD’s price cut make its EV the cheapest new car in Australia?
11:39–13:11
7
What safety recall did BYD issue for its Shark Six Ute and why does it matter?
13:11–15:27
8
What items from Brigitte Bardot’s estate are being auctioned and how will the proceeds be used?
15:27–17:09