Treasurer Jim Chalmers says artificial intelligence is central to his aim to turn around Australia’s lagging productivity, which could ultimately help lower interest rates. Productivity and real wages growth have been generally stagnant in Australia for more than a decade, with business investment also generally weak, albeit with recent signs that capital expenditure is starting to pick up. Stagnating productivity means that, instead of making and selling more goods from each hour worked, businesses can generally only maintain or increase their profits by raising prices. This drives up inflation and has created a key sticking point for the Reserve Bank when it considers whether to raise or lower interest rates, as the central bank seeks to balance price stability with sustainable employment.<\/p>\n\n\n\n
OECD data shows that instead of productivity, corporate Australia is relying on high migration, consumer wealth from house values and favourable terms of international trade to maintain its profitability. In an interview with Alan Kohler, Chalmers spruiked the government’s new AI framework announced by Prime Minister Anthony Albanese and said artificial intelligence and productivity would be \u201cfront and centre\u201d of the intergenerational report he would be releasing towards the end of the year. \u201cIf you look at all the big shifts in the global economy and in our societies \u2014 aging and demographics, changing industrial base, geopolitical fragmentation, the energy transformation, all of that is relevant to this technological revolution which we see in AI,\u201d he said. The Treasurer’s comments reflect a growing recognition that Australia cannot rely on population growth alone to drive economic prosperity.<\/p>\n\n\n\n
\u201cFor me, it’s central to the work that I do as Treasurer, and it’s central to the work that I do trying to turn around a couple of decades of ordinary productivity performance,\u201d Chalmers said. \u201cEverybody recognises at the most basic level that AI has the capacity to make our economy more dynamic and therefore more productive and the best way to grow our economy over time and lift living standards for people is to make it more productive.\u201d Chalmers said Australia’s productivity decline had spanned two decades and the most recent federal budget included an estimated $10 billion cut in compliance costs forecast to lift GDP by $13 billion \u2014 the biggest boost to productivity in three decades. He emphasised that these measures are designed to create an environment where businesses can innovate and adopt new technologies without being weighed down by red tape.<\/p>\n\n\n\n\n\n\n\n
Chalmers defended the government’s track record on AI but said the announcement to centralise regulation in the prime minister’s office was about legislating the standards for data centres and making sure creators maintained control of their work. \u201cI see a lot of upside in AI when it comes to our economy and our society,\u201d he said. \u201cWhen investors look around the world, they see our renewable energy opportunity, they see our government stability, our geography, our national security arrangements, all of that is very attractive to them.\u201d The government wants to house more than just regular cloud-based data centres and could also be home to large-scale frontier AI training, positioning Australia as a regional hub for advanced computing infrastructure.<\/p>\n\n\n\n
The Treasurer’s optimism is tempered by the challenges of implementing AI safely and equitably. He acknowledged that the transition will require upskilling the workforce and ensuring that workers are not left behind. The government has committed to funding training programs in digital literacy and AI-related skills, targeting both school leavers and mid-career professionals seeking to reskill. Chalmers also noted that the government is consulting widely with industry, unions and civil society to develop a regulatory framework that encourages innovation while protecting against the risks of bias, misinformation and job displacement.<\/p>\n\n\n\n
Looking forward, Chalmers believes that AI could be the key to breaking Australia’s productivity rut and unlocking a new era of prosperity. He pointed to examples in healthcare, logistics and finance where AI is already delivering efficiency gains, and argued that scaling these benefits across the economy is the central challenge of the decade. The intergenerational report, due later this year, will provide a comprehensive roadmap for how Australia can harness technology to build a more resilient and dynamic economy. For now, the Treasurer is urging Australians to embrace the changes ahead, while reassuring them that the government will act as a responsible steward of this transformative technology.<\/p>\n","protected":false},"excerpt":{"rendered":"
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