Oceania | Economy | Oceania

The Transitions Shaping Australia’s Future

In its latest Intergenerational Report, the Australian Treasury lays out five transitions shaping the coming decades.

Every five years, the Australian Treasury releases its Intergenerational Report (IGR). The report is designed to look at the major structural changes and challenges the country faces to understand how Australia can best navigate the world in the coming decades. This week, the Treasury released its latest report. It argued that despite significant global changes, Australia remains relatively well placed to maintain its prosperity, but its major advantages cannot be taken for granted. 

The report highlighted five transitions that will shape the coming decades: artificial intelligence, geopolitical fragmentation, the energy transition, an aging population, and the transformation of Australia’s industrial base. A sixth, overarching, issue is a continuation of intergenerational inequality, with older generations remaining better off than younger Australians. This affects the major structural components of people’s lives – affordable housing, what taxation younger generations will have to pay, and their overall access to opportunity. 

The most significant new development to arise since the previous IGR is the ascent of AI. Here, the actual real world outcomes remain unknown, but the Treasury treats AI as a general-purpose technology capable of shifting the economic realities of a wide range of industries. AI is expected to automate some tasks while – hopefully – increasing demand for other forms of work, particularly where human judgment and relationships remain important. The question remains whether Australian businesses and institutions can adjust quickly enough to capture its potential gains, while being aware of and adaptable to any potential negative side effects. 

The other major change since the last report has been the acceleration of change in the international environment. Australia’s primary security partner, the United States, is seemingly working hard to dismantle the network of allies that has maintained relative peace and stability over the past 80 years, and it cannot be assumed that this tendency in Washington will subside when President Donald Trump leaves office. China’s massive military build-up and flouting of international law in the South China Sea remains a potential major disruptive force in the Indo-Pacific, while Russia’s invasion of Ukraine has shifted Europe’s focus away from opportunity in the Indo-Pacific to security at home. 

The 2026 IGR expects geopolitical fragmentation to make economic relationships increasingly dependent on security considerations, rather than efficiency alone. This creates significant tension for Australia as it has benefited from the openness of international trade,........

© The Diplomat