Australia’s 2023 Intergenerational Report handed down by the Treasurer, Jim Chalmers this week, lists five primary forces – among them digital and data tech, climate change and energy transition – expected to profoundly shape the economy over the next four decades.
It is projected the size of the economy will more than double by 2063 despite a slower, migration-driven population increase. Climate is shaping as a major determinant of future economic growth.
The transition to a carbon-neutral economy presents an opportunity, particularly with the reduction in energy costs from Australia’s access to cheap renewable energy sources. Access to rare earth elements, lithium and cobalt for battery manufacture is also identified as a major industrial advantage.
At the same time, advances in digital technology and artificial intelligence are seen as major drivers of overall productivity, health advances and support climate change mitigation.
But it does explicitly name climate change as a handbrake on the economy, due to the anticipated spike in extreme weather events undermining ecosystems, infrastructure, food production and health. It calls for “timely investment” in adaptation measures to reduce economic risk.
It also notes some costs of climate change are unavoidable, saying “sustained action across adaptation and emissions reduction will be required to maintain productivity and fiscal sustainability as well as achieve better social and environmental outcomes”.
Increased temperatures are slated as a major impediment to productivity and economic growth, with tradespeople, machinery operators and labourers likely to be the most adversely affected by global warming over the next four decades, while office-based staff and clerical workers will be least exposed.
“Productivity in sectors like agriculture and construction is damaged at higher temperatures,” says Jim Hancock, the deputy director of the SA Centre for Economic Studies at the University of Adelaide.
“Increased frequency of natural disaster events also undermines living standards more broadly. We will need to adapt to these changes, but we also still have a chance to support a global approach which limits the extent of damaging climate change.
“Transition brings costs of its own and it is important that we set a net zero pathway that minimises the whole of economy costs of getting there.”
Australia’s ageing population
Australis’ age and health profile is changing, and with it comes questions of how to prolong the healthy years a person can expect to have.
Compared to 2023, twice as many people will be older than 65 by 2063, and 3 times as many will be over 85. This will add demand for effective health and care systems and services.
Experts like Associate Professor Darshini Ashton from Monash University’s health and social care unit say this shifting demographic profile will force existing systems to adapt.
“Our ageing population is a public health success story. We have prevention and treatment for many diseases that have led to people living longer and living well,” Ayton says. “The systems of care across health and social care need to be reimagined to make sure we are addressing the needs of our older adults.
“This includes better and timely access to health and social care across state and federal government boundaries to enable older people to live at home for longer; educating and attracting the next generation of the aged care workforce; and ensuring we have processes in place to respond to innovations in drug discovery and diagnosis, in for example, Alzheimer’s disease.”
Recent studies found Australians over 50 were working increasingly longer, but women and those who leave school before the end of Year 12 were seeing their number of healthy years in work decline.
While technology may make some work easier, it could also limit the opportunities for some older people to continue workforce participation. But extending the ability for people to work into old age is identified in the report and other research as being effective at reducing health risks and, by extension, the burden on the economy.
