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Experts say Intergenerational Report underplays climate crisis damage to Australia's future

Treasury's 40-year outlook hails AI as 'defining influence' but critics warn it ignores looming economic costs of global heating

By LineZotpaper
Published
Updated
Read Time2 min
Sources6 outlets
The government's seventh Intergenerational Report has been sharply criticised by experts for underplaying the economic and social damage expected from the worsening climate crisis, even as the Treasury's 40-year outlook casts artificial intelligence as "a defining influence" on Australia's economy.

One academic told the Guardian that the report's prediction for 2066 "is negligent in ignoring the economic damage" on the horizon. The report itself describes the effects of global heating four decades from now as "highly uncertain", pointing to the pace of the global energy transition as a key source of unpredictability.

The criticism came as Treasurer Jim Chalmers released the long-awaited report on Monday, the first since 2023. It projects the Australian economy will be more than twice as large by the mid-2060s, with per capita income 55 per cent higher — but growth is expected to weaken to about 2 per cent annually, down from 3 per cent over the past four decades.

The report paints a mixed picture: lower growth, a declining birth rate and unending budget deficits, alongside an ageing population that will exacerbate budgetary pressures. It argues Australia is well placed to meet those challenges.

On AI, the report says the technology's precise impact will depend on how extensively it is adopted and Australia's position in global supply chains, meaning estimates of its productivity boost vary widely. Launching the report, Chalmers said "the economy of the next 40 years will be built with AI-enabled services, smarter technologies, new clean industries powered by cheaper energy, and more secure partnerships in the world".

He detailed ten government priorities, including making productivity a whole-of-government focus, harnessing AI in the national interest, rebalancing the tax system, delivering cleaner and cheaper energy, and improving budget sustainability. The report also notes the budget position has improved "noticeably" since 2023, though fiscal pressures remain.

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Analysis

Why This Matters

  • The Intergenerational Report shapes long-term federal policy assumptions across tax, health, energy and immigration — the criticism that it downplays climate damage could alter how those pressures are weighed.
  • With projections of weaker growth, an ageing population and persistent deficits, the report frames the central challenge for the next four decades: how Australia lifts productivity and living standards while managing mounting fiscal strain.
  • The debate over AI's productivity potential is not academic — it underpins Treasury's assumptions about future economic growth and government revenue.

Background

Intergenerational Reports are prepared by the Treasury roughly every five years to project long-term demographic, economic and budgetary trends. This seventh edition looks out to 2066. Alongside expectations of slower economic growth and a declining birth rate, the report highlights an ageing population as a growing burden on budgets, while arguing Australia is comparatively well positioned to navigate these transitions. The findings arrive as Prime Minister Anthony Albanese makes AI a central topic during his visit to the United States.

Key Perspectives

Treasury and the government: Argue Australia is one of the best placed economies to benefit from coming transitions, pointing to a resilient economy, a highly skilled workforce and a reform agenda aimed at securing the benefits of change for Australians. Climate experts and academics: Contend the report is negligent in failing to account properly for the economic damage of climate change, treating the effects of global heating four decades out as too uncertain to model. Critics/Skeptics: May question the wide variance in AI productivity estimates, noting the report concedes the technology's impact hinges on adoption rates and Australia's place in global supply chains — factors that remain deeply uncertain.

What to Watch

  • Whether the government responds to the climate criticism by amending assumptions in future budget updates or the next IGR.
  • Ongoing signs of fiscal deterioration — deficits that the report says will continue — and any pressure on the government's ten reform priorities.
  • Developments on AI policy during the Prime Minister's US trip, which could signal how seriously the government intends to pursue the productivity gains the report envisages.

Sources

Zotpaper

Written by software from the reporting listed above, scored by an automated standards desk, and published without a person reading it first. If something here is wrong, tell the editor and it will be put right.

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