Australia Turns to Artificial Intelligence for Decades of Growth, Productivity and Global Competitiveness

Australia is placing artificial intelligence at the center of its economic strategy, with Treasury planning built around the technology’s ability to lift productivity over the next 40 years. The bet comes as slower productivity growth and deeper global fragmentation put pressure on the country to find new sources of expansion. Bloomberg described AI as a central engine of future growth in its coverage of the government’s Intergenerational Report.

The economic case rests on a familiar weakness: Australia has fallen behind the United States on productivity, with one estimate putting the gap at 18%. OpenAI’s Australian economic blueprint places the annual opportunity at A$115 billion by 2030, while EY research estimates a cumulative boost of A$116 billion over the next decade. Those figures describe scenarios rather than guaranteed outcomes, but they show why AI has moved from a technology policy issue to a national economic priority.

AI’s main contribution to Australia’s economy is expected to come through higher output from existing workers, improved business processes and faster innovation. An analysis cited by Northjersey estimates that wider adoption could raise multifactor productivity by 2.0% to 2.4% and increase gross domestic product. EY reached its estimate by modelling productivity gains across occupations, then tracing their effects through industries, investment, employment and economy-wide growth.

The Reserve Bank has documented strong growth in Australian firms’ information-technology investment over the past decade, creating a foundation for AI adoption. Yet investment has not translated evenly across the economy. Large businesses reported AI adoption rates near 35% in 2024-25, compared with roughly 11% among small and micro businesses, according to Department of Industry, Science and Resources figures cited by Northjersey. OpenAI’s blueprint identifies healthcare, education, agriculture and public services as areas where efficiency gains could spread beyond technology companies.

Australia’s economic return from AI will depend on whether smaller firms and less digitally mature industries can adopt the tools, not only whether large companies increase spending. Businesses already undertaking innovation reported higher AI use, pointing to a reinforcing cycle in which stronger management practices and technology investment support each other. The adoption gap leaves a large portion of the economy outside the earliest gains.

The investment challenge is substantial. The Australian Academy of Technological Sciences and Engineering says global AI investment is accelerating toward A$3 trillion in 2026, while Australia has invested just over A$300 million during the past 5 years. Its investment blueprint calls for attention to 6 AI enablers, including national infrastructure and the capabilities needed to build and deploy systems. The contrast frames the policy choice clearly: Australia can buy access to overseas technology, or build more of the skills, research and infrastructure that capture value locally.

AI-led growth is projected to create jobs alongside productivity gains, but the transition will require substantial reskilling. EY estimates that adoption could produce between 36,000 and 44,000 additional jobs by 2036, as lower costs and higher output generate new demand across industries. OpenAI’s blueprint also presents AI as a tool for improving public services and expanding the capacity of workers rather than as a narrow automation project.

The distribution of those gains will depend on training, workplace redesign and access to digital systems. Large innovative companies are already adopting AI faster than smaller firms, so education and reskilling policies will need to reach businesses that lack specialist staff and capital. The government’s long-horizon strategy also links AI to scientific research, healthcare, education and agriculture, sectors where implementation depends on trusted data, professional judgment and sustained institutional investment.

Australia’s AI strategy is also a response to a more divided global economy. Bloomberg reported that the government expects international tensions and economic fragmentation to intensify, increasing the value of domestic technological capability. AI therefore carries two roles: a productivity tool for Australian firms and a strategic asset tied to national resilience.

That ambition faces a scale problem. Australia has strong research institutions and industry expertise, but its public investment is small beside global spending. The Academy of Technological Sciences and Engineering’s call for coordinated national enablers points toward infrastructure, research, skills, data and commercial pathways as connected requirements. The federal Industry Department’s AI policy work provides the institutional framework, while the Reserve Bank’s research offers evidence that technology investment is already becoming a larger part of business activity.

Australia’s next test is execution: turning long-range forecasts into adoption across small businesses, public agencies and regional industries. The scale of the projected gains gives policymakers a reason to support infrastructure, training and research, while the uneven adoption data shows where those measures are most needed. Economic value will depend on implementation, not headline estimates.

The country enters this effort with growing technology investment, a large research base and a clear productivity problem. It also faces a gap between global AI spending and domestic investment, plus the practical challenge of helping workers and firms adapt. If Australia closes that gap, AI can become a durable source of productivity and employment growth. If adoption remains concentrated among large companies, the gains will be narrower and the 40-year wager harder to deliver.