Australia’s 40-Year Economic Outlook Puts AI at the Center of Growth, Omits Crypto

Treasury’s seventh Intergenerational Report, released Monday, names artificial intelligence “a defining influence on the economy over the next 40 years” and makes no reference to crypto, blockchain or stablecoins in its projections for Australia to 2065-66.

In real terms, the economy is projected to be more than twice as large and income per capita 55% higher by the end of that period. 

Treasury projects average annual real GDP growth of 2% over the next four decades, below the 3% recorded over the past 40 years, primarily because the population ages and its growth slows to a projected 0.9% a year from 1.4%.

The report lists AI alongside geopolitical fragmentation, the energy transition, faster population ageing and an industrial base moving further towards services as the five transitions shaping the outlook. 

Treasurer Jim Chalmers stated on its release: “Advances in AI represent the most dramatic change since the last IGR in 2023 and we’re acting now to maximise the opportunities and minimise the serious risks it presents”.

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AI Investment and Productivity

Treasury calls Australia “a leading destination globally for data centre investment”, with capital expenditure in the sector nearly doubling since the 2023 report. 

The government is developing national AI standards with the states and territories that would set minimum requirements for large AI data centres, including on energy, water and location.

About two-thirds of Australian businesses report adopting AI in some form, but only about one in 10 describe that adoption as significant, and the report states there is “not yet evidence of significant labour market impacts”. 

The Productivity Commission estimates AI could lift multifactor productivity by more than 2.3% over the next decade, gains Treasury says would help meet its long-term productivity growth assumption of 1.2% a year.

The 2023 edition, which Treasury says focused on “technological change and digitalisation” among its major transitions, did not mention crypto either.

Parliament passed the government’s Digital Assets Framework legislation on 1 April, and the law brings digital asset platforms and tokenised custody platforms under financial services licensing when it commences on 9 April, 2027, according to ASIC. 

When the bill was introduced in November, a joint release from Chalmers and Assistant Treasurer Daniel Mulino stated: “We take Australia’s crypto industry seriously and we know that blockchain and digital assets present big opportunities for our economy, our financial sector and our businesses”.

On 3 September, Mulino released a Financial Innovation Strategy that flags possible regulatory sandboxes for digital financial market infrastructure. 

The same day, the RBA opened consultation on how its settlement services could support tokenised asset markets, and the RBA and Treasury concluded there is “no clear public interest case” for a retail central bank digital currency.

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