Speaking at a Business Council of Australia event last week, Chalmers acknowledged the country’s economic resilience but stressed that long-term growth hinges on improving productivity.
“Our economy is barely growing – an inevitable consequence of higher interest rates and global pressures,” he said.
Addressing criticism that Labor has relied too heavily on public sector spending while private sector growth lags, Chalmers reinforced the government’s stance: “We know that the best kind of strong and sustainable economic growth means growth led by the private sector.
“When I’ve said this on many occasions before, I’ve seen it written up as some kind of reluctant admission, but I think it’s just common sense.
“Our economy is at its best when it’s private companies powering growth and propelling us forward,” he added.
Touching on Labor’s five-pillar productivity agenda, announced last year, Chalmers revealed that the Productivity Commission has been tasked with a major review of each pillar, aimed at shaping policy decisions in the latter half of the year.
“We’ve asked the Productivity Commission for a big piece of work on each pillar, deliberately timed for the second half of this year to inform whoever wins the election,” Chalmers said.
“But we haven’t been waiting for those inquiries to land. We’ve already put in place some substantial and under-recognised policy,” pointing to initiatives such as abolishing 500 nuisance tariffs, introducing comprehensive competition reforms, overhauling merger laws, reforming foreign investment frameworks, and launching a $900 million National Productivity Fund.
Also last year, Labor announced its National AI Capability Plan, which aims to harness artificial intelligence to grow the economy.
Touching on the topic last week, Chalmers highlighted AI as a major driver of future productivity, noting that more than half of Australia’s historical productivity growth has come from “working smarter” by integrating skills and capital more efficiently.
“It’s AI and the digital economy where we see huge opportunities,” the Treasurer said.
He pointed to recent global AI developments – including the US government’s $800 billion Stargate AI project and a Chinese start-up’s impact on Nvidia’s market cap – as evidence of AI’s transformative potential.
“It’s clear AI will become a bigger part of our economy and lives. How we respond will shape the future,” Chalmers said.
“Australia is among the top five global destinations for the data centre infrastructure AI depends on.”
With 70 per cent of Australian businesses already implementing AI – and another 20 per cent planning to in the next year – Chalmers said the government is focused on ensuring the right policy settings are in place to support AI adoption while maintaining safeguards.
“Our focus with AI is also on the huge gains on offer, not just the guardrails,” the Treasurer said.
“We want to continue to build and foster innovation, so more workers and more businesses adapt and adopt AI to their advantage,” he said, adding the government also wants to provide investors with clarity and confidence to invest in Australia’s AI infrastructure.
Chalmers also maintained that Australia has defied global economic trends by avoiding a recession while keeping unemployment low.
“Inflation is down, unemployment is still low, and, unlike most of our peers, we’ve avoided even one negative quarter of growth,” he said.
“You’d know and appreciate how unusual this is in historical terms and in contemporary global experience as well.”
