Australia's Treasury writes AI into its 40-year fiscal baseline

Two lines in the same document carry different weight. Four more years of life for each cohort inside four decades, with the gap between women and men holding at about four years ^[3], extends a trend already in the data, and Jim Chalmers attributes the gains to universal healthcare and medical research ^[6]. The report's other big line is about AI, a technology the treasurer says comes with "very substantial risks" ^[4][5]. Both feed the same baseline, and the report uses that baseline to argue for further investment in Medicare, the Pharmaceutical Benefits Scheme and the recent rollout of urgent care clinics ^[7].

Chalmers told News24's Sunday Agenda that a growing and ageing population would be at the centre of long-term budget pressures ^[8]. "There are elements of the intergenerational report which are confronting, but it's not a pessimistic report ... because Australians are genuinely better placed and better prepared for all of this accelerating change that we are seeing," he said ^[9].

The population figure has already moved. Treasury now puts the mid-2060s population at 39.3 million, 1.8 million below the 2023 report ^[11]. That makes the earlier forecast about 41.1 million, and the downgrade roughly 4% in three years ^[1][2]. The half-point cut to annual growth takes about a third off the rate of the previous 40 years ^[4]. "Almost half the decline in fertility rates is actually because fewer people are having three or more kids and what that reflects is mums having fewer kids later in life," Chalmers said ^[14]. He pointed to subsidised childcare, higher paid parental leave and a lift in mandatory superannuation contributions as the policy response ^[15].

The fiscal improvement comes with a condition. Debt 40 years out is now half a trillion dollars lower than the 2023 report projected, and much of the economic progress behind that relies on emerging technologies such as AI ^[16]. Treasury's earlier advice set the terms: significant productivity gains across the public and private sectors if the nation kept pace with the global shift towards the technology ^[18]. The extract says only that much of the progress rests on those technologies, and the full report is published Monday ^[1]. "Overwhelmingly, the fiscal story is a little bit better; but still, lots, lots more work to do to manage some of these pressures and risks," Chalmers said ^[17].

A future government can walk away from a 40-year projection, and the next report will replace this one. So far the revision has landed in the population column. The productivity line is the one Treasury itself hedged with a condition ^[18].

The governance question is this week's business. Anthony Albanese is in the United States this week to press for a "global framework" on the AI rollout, urging the "big two giants" to act in the interest of humanity ^[20]. "We want to see cooperation. We've seen that in the past with new technologies, even on nuclear weapons, for example, we saw agreements and protocols put in place through the nuclear non-proliferation treaty," he told ABC's Insiders ^[21]. He added that "middle powers such as Australia have a role to play here as well" ^[22]. Chalmers, for his part, said the government would work to "minimise the very substantial risks" ^[19].