Economists slam Australian productivity assumptions in new living-standard forecast

Treasurer Jim Chalmers presented the latest Intergenerational Report, forecasting that Australia’s real GDP will more than double over the next forty years and that per-capita income will rise by 55%, predicated on productivity returning to a long-term target of 1.2% per year. Economists challenged the projection as overly optimistic; HSBC chief economist Paul Bloxham highlighted that productivity has averaged only 0.3% over the past decade and fell 0.2% in the most recent quarter, questioning the reliance on AI and regulatory reforms to drive growth.

Independent economist Chris Richardson dismissed the assumption as “bollocks,” arguing that supply constraints such as housing shortages and cheap energy cannot be solved by AI. Under a more modest 0.8% productivity path, average future income would be $20,000 lower than the baseline and real GDP growth would drop to 1.2% annually, while the federal deficit could rise to 4.2% of GDP and debt to 55.9% of GDP. The debate highlights uncertainty over Australia’s long-term living-standard outlook and fiscal health.