Clean energy, data and digital technologies will be key parts of the Albanese government’s response to an intergenerational report forecasting continued challenges to productivity and Australian innovation.
Treasurer Jim Chalmers will release the 2023 Intergenerational Report (IGR) and the government’s five point plan to respond to the productivity issues it outlines on Thursday.
The report, which forecasts the next 40 years, says the nation’s ability to reverse the current worst decade for productivity in 60 years will depend on how Australia responds to structural changes like climate change, the care economy and digital technologies.
Released roughly every five years, the latest Intergenerational Report predicts the Australian economy will grow at a slower pace than in past decades, in line with other advanced economies. The 2023 report sticks with the more recent less optimistic productivity growth forecasts made in the latest budgets of 1.2 per cent.
But “new frontiers for innovation and investment” are presenting an opportunity right the productivity drift, according to the IGR.
“Emerging data and digital innovations, such as cloud computing, machine learning and artificial intelligence, have the potential to transform the future of work by automating more routine tasks and improving worker capability,” the report will say.
Mr Chalmers said the government’s investment in digital infrastructure like a digital identity, NBN upgrades and more than $100 million for quantum and artificial intelligence are part of the government’s response to productivity challenges.
“Our approach is all about investing in our people, skills, innovation, technology and cheaper and cleaner energy — not about making people work harder for less,” the Treasurer said.
There is growing global demand for these types of emerging technologies and related skills, and Australia’s current lag can be seen as an opportunity, according to the report.
“Given the gap between Australian firms and the global productivity frontier, there are significant opportunities for supporting a dynamic and competitive business environment that incentivises firms to adopt new innovations.”
Grattan Institute chief executive Danielle Wood said new technologies could boost productivity but it is not guaranteed.
“It might be the case that we have incredible technological change that unleashes waves of productivity… That would mean that these [productivity growth] numbers look a lot better, but I don’t think it would be the right thing to assume that when we haven’t actually seen that feed through into productivity as yet,” she said.
A more dynamic economy would also improve productivity and amplify the benefits of new technologies, according to the IGR, which has adopted the Productivity Commission’s call to focus on diffusing new technologies rather than inventing them.
“Most Australian businesses adopt innovations created by others, underscoring the importance of settings that facilitate the diffusion of new technologies and ideas throughout the economy,” it will say.
Australia’s changing industrial mix also presents an opportunity to revive productivity, particularly the net zero transition, according to the IGR.
“Our approach is all about investing in our people, skills, innovation, technology and cheaper and cleaner energy – not about making people work harder for less,” Mr Chalmers said.
“We have an ambitious productivity agenda because we know how important it is – boosting productivity is vital to boosting wages and living standards.”
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