# A richer Australia in 2066 – but for who?

An episode of [7am](https://invisiblenetwork.ai/podcast/1461999702), 21 Sep 2026, 14 min.

Audio: https://p.podderapp.com/2544644999/traffic.omny.fm/d/clips/2fb3740d-3436-44af-8cc0-a91900716aa5/62723a1f-3e96-4fc4-882c-b25e0181da4d/678d6db8-68e4-409f-b97a-b4cc0063d367/audio.mp3?utm_source=Podcast&in_playlist=70f29d90-2a63-48aa-bf8f-b25e0181da70

Australia in 2066 will be older, richer, and – according to the treasurer – transformed by artificial intelligence. The latest intergenerational report says, despite an aging population, our real incomes will be 55 percent higher by 2066. And Jim Chalmers says AI will get us there. But the same report says younger Australians aren’t seeing the same gains in income, wealth and home ownership as the generations before it. So what does this report really say about our future – and how much of it is political wishful thinking. Today, Vice Chancellor’s professor and Chief Societal Economist at the University of New South Wales, Richard Holden on what Australia could look like in 40 years – and where the economics end and the politics begin. If you enjoy 7am, the best way you can support us is by making a contribution at 7ampodcast.com.au/support. Socials: Stay in touch with us on Instagram Guest: UNSW Chief Societal Economist Richard Holden Photo: AAP Image/Mick Tsikas See omnystudio.com/listener for privacy information.

## Transcript

[0:01] Speaker 1: I'm Ruby Jones and you're listening to 7am. Australia in
[0:09] Speaker 1: 2066 will be older, richer and, according to the Treasurer,
[0:14] Speaker 1: transformed by artificial intelligence.
[0:16] Speaker 2: The AI revolution is the most consequential new emphasis since
[0:21] Speaker 2: the 2023 report and the biggest economic transformation.
[0:26] Speaker 3: Of our lifetimes.
[0:27] Speaker 1: The latest intergenerational report says despite an ageing population, our
[0:31] Speaker 1: real incomes will be 55% higher by 2066. And Jim
[0:36] Speaker 1: Chalmers says AI will get us there.
[0:39] Speaker 3: Australia has positioned itself early and well.
[0:43] Speaker 1: But the same report says younger Australians aren't seeing the
[0:45] Speaker 1: same gains in income, wealth and home ownership as the
[0:48] Speaker 1: generations before it. So what does this report really say
[0:52] Speaker 1: about our future and how much of it is political
[0:55] Speaker 1: wishful thinking? Today, Vice-Chancellor's Professor and Chief Societal Economist at
[1:00] Speaker 1: the University of New South Wales, Richard Holden, on what
[1:04] Speaker 1: Australia could look like in 40 years and where the
[1:07] Speaker 1: economics end and the politics begin. It's Tuesday, September 22. Richard,
[1:24] Speaker 1: when you first read this report, what story did you
[1:28] Speaker 1: think that it was trying to tell us about Australia's future?
[1:31] Speaker 2: Well, I think it was trying to tell a pretty
[1:33] Speaker 2: upbeat story about Australia's future. I think it read a
[1:36] Speaker 2: little bit like a press release. There are a lot
[1:38] Speaker 2: of very familiar themes that the government's been emphasising for
[1:42] Speaker 2: several years now.
[1:43] Speaker 3: It seemed very familiar.
[1:45] Speaker 2: So it looked like a report that was less bottom-up
[1:48] Speaker 2: from Treasury doing modelling and more crafted with a top-down narrative.
[1:53] Speaker 2: with analysis to support it. But it tells a fairly
[1:57] Speaker 2: optimistic future about the next four decades for Australia.
[2:01] Speaker 1: Well, let's talk more about what it's saying about the
[2:03] Speaker 1: future for young people, because there is this number in
[2:07] Speaker 1: the report that claims that Australians will be 55% richer
[2:11] Speaker 1: per person in 40 years' time. Can we interrogate that
[2:16] Speaker 1: a little? Are our next generation really likely to be
[2:20] Speaker 1: that much better off?
[2:21] Speaker 2: Well, that sounds like a lot, but it's over 40 years.
[2:25] Speaker 2: And another way you could say it is if productivity
[2:29] Speaker 2: growth was more at the levels that it was in
[2:33] Speaker 2: the late 1980s, the 1990s, then instead of being 55%
[2:38] Speaker 2: better off, they'd be like two or three times better off.
[2:43] Speaker 3: So really a lot better off, as much as three
[2:45] Speaker 3: times better off.
[2:45] Speaker 2: So Very small numbers compounded for a really long time
[2:49] Speaker 2: adds up to, you know, seemingly large numbers. So it
[2:53] Speaker 2: sounds like a lot, but we've expected better in the past.
[2:56] Speaker 1: And the report does note the period of transition that
[2:59] Speaker 1: we're in right now and the instability that we face
[3:02] Speaker 1: in terms of the political environment, technology. Jim Chalmers, he
[3:07] Speaker 1: opened his speech talking about AI and calling that potentially
[3:11] Speaker 1: the biggest economic transformation of our lifetimes. So what is
[3:15] Speaker 1: the social and economic impact of AI.
[3:17] Speaker 3: Predicted to be?
[3:19] Speaker 2: Well, AI is pretty central to the productivity forecast, which
[3:23] Speaker 2: really drives a lot of the GDP growth. growth forecast,
[3:27] Speaker 2: the GDP per capita. Now, that's forecast to be 1.2%
[3:31] Speaker 2: on average over the four decades. Now, over our last decade,
[3:35] Speaker 2: that number's been zero. So, it's requiring a step up
[3:41] Speaker 2: kind of starting now. And the way Treasury has thought
[3:44] Speaker 2: about that is about half of that 1.2% a year
[3:48] Speaker 2: coming from AI. And that's certainly possible.
[3:51] Speaker 3: I mean, I.
[3:52] Speaker 2: Agree that AI is a transformational, once in a multi-generation technology.
[3:58] Speaker 2: The real question is how Australia goes about capturing those benefits.
[4:02] Speaker 2: And of course, that's speculative and that doesn't just depend
[4:05] Speaker 2: on government. It depends very much on the private sector,
[4:09] Speaker 2: you know, reorganising their whole operations around AI.
[4:13] Speaker 3: And that will take a lot of.
[4:14] Speaker 2: Work, but it's a very, very important component of the
[4:18] Speaker 2: optimistic story that the IGR tells.
[4:21] Speaker 1: Which does sort of beg the question, though, that when
[4:23] Speaker 1: it comes to delivering productivity, how much of what is
[4:26] Speaker 1: in this report is actual modelling and how much of
[4:29] Speaker 1: this is hope?
[4:31] Speaker 2: There's some hopium being smoked in the report for sure.
[4:36] Speaker 2: And while it's fair and the Treasurer emphasised this in
[4:39] Speaker 2: his remarks, yeah, he said no economist would bet their
[4:42] Speaker 2: life on something, you know, four decades out.
[4:45] Speaker 3: Go a little bit further than that.
[4:47] Speaker 2: I'm very fond of quoting the American baseball player Yogi Berra,
[4:51] Speaker 2: who said it's tricky to make predictions, especially about the future.
[4:55] Speaker 2: And that's why in a sense, I wish that we would,
[4:59] Speaker 2: and the government in particular, but those of us who
[5:01] Speaker 2: commentate on it as well, would flip the script a
[5:03] Speaker 2: little bit. And rather than say, look, we've made some
[5:05] Speaker 2: assumptions and here's what comes out the other end of
[5:07] Speaker 2: a complicated financial model, I'd rather say, where do we
[5:11] Speaker 2: want to be in terms of our social outcomes, our
[5:14] Speaker 2: economic outcomes, our national balance sheet? Where do we want
[5:16] Speaker 2: to be in four decades? And then what would we
[5:19] Speaker 2: need to believe in to get there, because that really
[5:22] Speaker 2: focuses the mind. That says we need 1% to 1.2%
[5:25] Speaker 2: productivity growth. We need AI to be really important. So
[5:28] Speaker 2: we better measure that every year. And I think that
[5:32] Speaker 2: the risk with the intergenerational report is it's a 24-hour
[5:36] Speaker 2: news cycle once every three years, and everyone sort of
[5:38] Speaker 2: forgets about it. If it's to serve the purpose that
[5:41] Speaker 2: Peter Costello set it up to do in 2002, To
[5:44] Speaker 2: be what it really can be, I think, we need
[5:47] Speaker 2: to hold government, all governments, more accountable on an ongoing
[5:52] Speaker 2: basis rather than it just being an exercise in prediction,
[5:55] Speaker 2: which is challenging.
[5:56] Speaker 1: Can we talk some more about what the original purpose
[5:59] Speaker 1: of these reports was? When the Treasurer at the time,
[6:02] Speaker 1: Peter Costello, introduced them back in 2002, what were they
[6:07] Speaker 1: originally designed to do?
[6:08] Speaker 2: To just give us a much longer-term picture of where
[6:11] Speaker 2: we're headed as a nation, federal budgets have this four-year
[6:15] Speaker 2: so-called forward estimate period and is more focused on government
[6:20] Speaker 2: finances on the budget, understandably, it being a budget, and
[6:23] Speaker 2: they have a little bit of stuff about what might
[6:24] Speaker 2: happen a decade out. Costello really wanted us to take
[6:27] Speaker 2: a longer-term view centred around economic things like productivity, but
[6:33] Speaker 2: he also wanted to talk about the structure of society
[6:36] Speaker 2: and the aging of the population and who was going
[6:38] Speaker 2: to support an aging population as we went forward. So
[6:42] Speaker 2: it could speak to things like, you know, our fertility rate,
[6:45] Speaker 2: our immigration levels. And Costello famously enacted the, you know,
[6:50] Speaker 2: so-called baby bonus to try and in some sense encourage
[6:54] Speaker 2: a higher natural population growth rate. So those kinds of
[6:57] Speaker 2: factors were very much on his mind. And I think
[6:59] Speaker 2: that was the original intention.
[7:01] Speaker 1: And so we're 24 years on from that original report.
[7:05] Speaker 1: How much of what it predicted bore out?
[7:08] Speaker 2: Some of it bore out, some of it not so much.
[7:10] Speaker 2: The economy hasn't done as well as we thought it
[7:13] Speaker 2: would back then. Population's grown faster than we thought it
[7:15] Speaker 2: would back then, in no small part because of relatively
[7:19] Speaker 2: high immigration rates. And much of that's been incredibly good
[7:22] Speaker 2: for Australia, but there's obviously a very active current debate
[7:25] Speaker 2: about those levels and what it means for infrastructure, housing
[7:31] Speaker 2: and hospitals and schools and roads and so on. So
[7:34] Speaker 2: that's been higher than we thought. Economic growth's been worse
[7:37] Speaker 2: than we thought. To be fair, there was the 2008-9
[7:40] Speaker 2: financial crisis. We had a pandemic. We've now got big
[7:44] Speaker 2: oil shocks in the Middle East. I think that's one
[7:46] Speaker 2: thing that the report notably doesn't really grapple with. It
[7:50] Speaker 2: acknowledges things like oh, there's geopolitical tensions and it talks
[7:54] Speaker 2: about how, you know, energy markets can kind of propagate
[7:58] Speaker 2: risk and so on. But these are really as breakout
[8:00] Speaker 2: boxes rather than really being incorporated into the financial modelling
[8:05] Speaker 2: and the architecture of what the IGR does. One thing
[8:09] Speaker 2: I would have liked to see more of and would
[8:11] Speaker 2: like to see more of going forward is really an
[8:14] Speaker 2: ability to grapple with big questions like, well, what if...
[8:18] Speaker 2: there was a Chinese invasion of Taiwan. What would happen
[8:20] Speaker 2: if the US stopped being the global reserve currency? What
[8:24] Speaker 2: might happen if our four big banks all got into
[8:27] Speaker 2: massive liquidity crunches and had to be bailed out? Again,
[8:31] Speaker 2: they're very hard to deal with, but over the course
[8:33] Speaker 2: of 40 years, a lot can happen. And the discipline
[8:36] Speaker 2: of putting them through a rigorous financial model would tell
[8:39] Speaker 2: us how we need to be prepared for perhaps unlikely,
[8:43] Speaker 2: but possible big events that could be hugely disruptive. to
[8:47] Speaker 2: Australian society and the economy. I think we want to
[8:51] Speaker 2: be prepared for what those sort of implications would be.
[8:53] Speaker 2: We would have been better prepared for the pandemic if
[8:56] Speaker 2: we'd had an off-the-shelf plan. And that was something that
[8:59] Speaker 2: Bill Gates, you know, said it's probably going to happen
[9:01] Speaker 2: a decade before it did.
[9:02] Speaker 3: So I think we could do more to be prepared.
[9:07] Speaker 1: Coming up, the big economic reforms that we do need. Richard,
[9:18] Speaker 1: you said that this report, it reads a bit like
[9:21] Speaker 1: a press release, emphasising things that are already government policy.
[9:25] Speaker 1: And you were involved in a major review of the
[9:30] Speaker 1: 2021 version of this report. As part of that, you
[9:33] Speaker 1: argued that these reports, they should actually be made more
[9:36] Speaker 1: independent of government. Can you talk a bit to that idea?
[9:40] Speaker 3: Yeah, absolutely.
[9:41] Speaker 2: I think that They're currently conducted by Treasury and Treasury
[9:44] Speaker 2: have political masters. And I think a number of the
[9:48] Speaker 2: topic areas and even the language that's used mirror press
[9:52] Speaker 2: releases and talking points and narrative arcs that the government
[9:55] Speaker 2: has used for the last you know, four years or so. So,
[9:58] Speaker 2: you know, like, I think if it was more independent
[10:00] Speaker 2: for a document like this, that's really meant to think
[10:03] Speaker 2: very broadly about the national interest over a really long
[10:05] Speaker 2: period of time, one, making it more independent of Treasury,
[10:10] Speaker 2: having maybe some kind of independent panel with input from
[10:14] Speaker 2: Treasury would be very useful. And I think The second
[10:16] Speaker 2: thing would be making all the economic modelling sort of
[10:20] Speaker 2: open source in a way. Let people play around with
[10:23] Speaker 2: their own views about what happens with that. Let them
[10:25] Speaker 2: plug it into other things. Make the work more available
[10:29] Speaker 2: than my understanding of what it currently is. That's what
[10:31] Speaker 2: I'd like to see. And that's what we talked about
[10:32] Speaker 2: in the wake of the 2001 IGR.
[10:35] Speaker 1: But not much has changed since then. No.
[10:38] Speaker 2: As the French like to say, the more things change,
[10:41] Speaker 2: the more things stay the same.
[10:44] Speaker 1: And so you've made the case that this report, it
[10:46] Speaker 1: doesn't really grapple with more difficult economic scenarios, and it should.
[10:52] Speaker 1: Does that extend to your thoughts on the government itself?
[10:56] Speaker 1: Do you think that it's failing to make big decisions
[10:59] Speaker 1: and big reforms when it comes to the economy?
[11:02] Speaker 3: I absolutely do.
[11:03] Speaker 2: I mean, we had an extraordinary run from 1983 through to,
[11:08] Speaker 2: you know, well into the 2000s. on both sides of
[11:11] Speaker 2: politics with Hawken Keating and Howard and Costello, we had
[11:14] Speaker 2: extraordinary prime minister treasurer teams and they took Australia from
[11:19] Speaker 2: what was a fairly insular economy, you know, really quite
[11:23] Speaker 2: disconnected from the world and really opened up Australia to
[11:26] Speaker 2: the world in a way that really benefited all Australians.
[11:30] Speaker 2: And since the GST, around about the turn of the century,
[11:34] Speaker 2: there really hasn't been a major positive economic reform since then.
[11:38] Speaker 2: And you don't have to change policy in a major
[11:41] Speaker 2: way every couple of years, but it can't be set
[11:44] Speaker 2: and forget either. And when you haven't done anything meaningful
[11:47] Speaker 2: in 25 years, it's not surprising that our policy settings
[11:53] Speaker 2: aren't really fit for purpose for the modern economy.
[11:57] Speaker 3: In which we operate.
[11:58] Speaker 1: Where do you think that boldness has gone?
[12:00] Speaker 2: I'm really torn as to whether it's about political leaders
[12:04] Speaker 2: and that maybe we're just really lucky to have those
[12:07] Speaker 2: political leaders that I talked about in Hawke and Keating
[12:10] Speaker 2: and Howard and Costello and a whole lot of other
[12:11] Speaker 2: people who are incredibly capable and played an important role
[12:15] Speaker 2: in the background.
[12:16] Speaker 3: Maybe it's something to do with the public service.
[12:18] Speaker 2: You know, politicians tell me you don't understand what it's
[12:20] Speaker 2: like to be in a 24-hour news cycle and social
[12:23] Speaker 2: media and so on. Maybe that's part of the story
[12:26] Speaker 2: as well. Maybe it's the fact that we have had
[12:29] Speaker 2: such a good run that the Australian public just demand less.
[12:32] Speaker 3: We're a little bit complacent.
[12:33] Speaker 2: We just sort of say, well, other than briefly during
[12:36] Speaker 2: the pandemic, we haven't had a recession in You know,
[12:38] Speaker 2: since 1991, no one's really demanding reform because we're not.
[12:43] Speaker 3: Used to seeing bad news play out.
[12:45] Speaker 2: It's probably some combination of all of those things.
[12:47] Speaker 3: But yeah, I do wonder.
[12:53] Speaker 1: Richard, thank you so much for your time.
[12:55] Speaker 3: Great to talk to you.
[13:05] Speaker 1: Also in the news, New South Wales police have urged
[13:08] Speaker 1: the state government to throw every available resource at domestic
[13:11] Speaker 1: violence after a spate of killings over the weekend. A
[13:15] Speaker 1: Sydney mum is expected to be charged with the murder
[13:17] Speaker 1: of one of her children and the attempted murder of
[13:20] Speaker 1: two more, all under the age of five, while three
[13:23] Speaker 1: women were allegedly murdered in other domestic violence incidents. The
[13:27] Speaker 1: police commissioner says he can't remember a weekend like it
[13:30] Speaker 1: in his career. And all four big banks are now
[13:34] Speaker 1: forecasting an RBA interest rate rise next week. And it
[13:37] Speaker 1: gets worse. ANZ is predicting there'll be a second rate
[13:40] Speaker 1: hike in November. If that happens, the cash rate will
[13:43] Speaker 1: reach 4.85%, its highest level since 2008. I'm Ruby Jones.
[13:45] Speaker 3: This is 7am.
[13:45] Speaker 1: Thanks for listening.

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