Interview with Tom Steinfort, Today, Channel 9

Subjects: Intergenerational Report, productivity, AI, immigration Tom Steinfort: Stung by falling birth rates, soaring lifespans and an AI revolution, Australia is bracing for the most radical economic shake up in a generation, and debt and deficits seemingly for eternity. For more, we are joined by Treasurer Jim Chalmers. Good to see you, Treasurer.

For me, when this forecast of the next 40 years came out, there were some alarm bells ringing because of deficits pretty much as far as the eye can see here. When will someone start taking responsibility for paying off Australia’s credit card bill? Jim Chalmers: I’m happy to answer that question, Tom, but first of all can I just say congratulations to you and Sylvia for your appointment.

These are big jobs that you’ve been given. I’m really pleased to be back to have a chat with you about this. On the issues in the Intergenerational Report, we’re realistic about the risks in there and the pressures, including the pressures on the budget, but we’re optimistic about the future.

One of the reasons that we are optimistic is that even with all of these pressures on the budget, we still have a budget which is in much better condition than other economies. If you look at the debt profile in the Intergenerational Report, debt as a share of our economy actually comes down over the 40‑year forecast period. In a lot of countries in the decades to come, debt as a share of their economies go up.

We’ve already got debt which is a sliver of what other countries like the US, the UK and others have. But it does require ongoing work, ongoing vigilance. We have been managing the budget in a very responsible way.

We delivered a couple of surpluses, we’ve got the deficits down. We’ve got the debt down quite considerably from the trajectory that we inherited a bit over 4 years ago. But there is always more work to do, and the benefit of the Intergenerational Report is to highlight the very serious risks, the very substantial pressures in our economy and in our budget, at the same time as it recognises that Australia’s got a lot going for it as well.

I mean, some economists are saying that those sort of rosy predictions are being held up by some optimistic predictions on productivity. The RBA, in particular, is not sharing your optimism there. A lot of it is dependent on AI helping boost our productivity.

You’re saying it’s the biggest economic transformation of our lifetime. Is it a bit bleak though, if we’re putting all our eggs in the basket of saying AI is going to save the day for Australia? We’re not doing that, but it will be a transformative technology.

It’s a really important way to make our economy more dynamic and competitive and more productive, so long as we manage the risks. The statement that Prime Minister Albanese signed Australia up to overnight with 20 countries is all about recognising this is a huge economic opportunity. But we will only maximise the upside of AI if we manage and minimise the risks.

That’s why these stronger global guardrails are so important. It’s why safety and standards and independent evaluation is so important. These are the key elements of the agreement that Australia signed up to overnight in the US.

When it comes to the productivity assumptions in the Intergenerational Report, it’s not unusual for economists to have different views in either direction about the most appropriate assumptions. What we’ve done in the Intergenerational Report, similarly in the Budget, is to take into consideration what other comparable countries are assuming in their longer‑term forecast.

We’re about in the middle range of that. It recognises that we can do a little bit better or a little bit worse on productivity over the next 40‑years. AI will be an important part of that, but not the only part of that.

The Budget actually had the biggest and broadest productivity package of any budget in decades to try and get approvals faster, to try and attract more investment, to work with the states more effectively. That’s because productivity is the main gain when it comes to delivering higher standards and higher wages for people over time, which is really at the core of our intergenerational goals – in addition to making the housing market fairer, cutting taxes for workers, strengthening superannuation and minimising the risks of AI.

Well, population and immigration are 2 of the big issues to come out of this, because as it stands, without immigration we’d have a declining population. As much as all parties are talking about reducing immigration, we do need it to keep the population afloat. But could we instead turn to trying to increase our own fertility rates?

Peter Costello famously introduced a baby bonus with this iconic picture. What do we think, can we get you down to the maternity ward, Treasurer, and recreate the magic? It is a wonderful picture, but I’m a bit different to Peter Costello in the sense that I don’t like to tell families what decisions to make about when to start a family, whether to start a family, or how many kids to have.

It is the case in the Intergenerational Report that fertility rates are falling faster than we anticipated even a few years ago. That’s why we’re piling so much investment into early childhood education. We expanded paid parental leave.

We’re paying super guarantee on paid parental leave. All of this is about making it easier for families to make a decision to start a family or to have more kids, if that’s the choice that they want to make. When it comes to migration, we have been managing migration down.

Migration in the net overseas migration number is actually down almost 50 per cent in the last few years. We’ve taken a more active role in managing that down to more normal levels after the spike after COVID‑19. The big policy announcement that Tony Burke made last week is all about a system which is more robust, where there are tighter controls, where we get the economic benefit from migration – which can be a force for good in our economy and in our community more broadly, so long as it’s well managed.

We’ve been managing the numbers down already, and we’ve got a whole suite of policies to make it easier for people to start a family or to have more kids if that’s what they want to do. Appreciate your time this morning. Thank you.