Australia’s 2026 Intergenerational Report: Key Findings and Digital Economy Implications

Australia’s 2026 Intergenerational Report (IGR), released September 21, 2026, looks ahead to 2065–66. Its main message for the digital economy is conditional: artificial intelligence (AI) and other technology could help lift productivity as population growth slows and the workforce ages, but the report does not treat those gains as automatic. Adoption, investment, skills, energy, and safeguards will shape whether digital tools improve output and living standards.

The report is a long-range economic and budget projection, not a precise forecast of which technologies or companies will win. Treasury identifies five major transitions: the AI revolution, geopolitical fragmentation, the energy transition, aging and the care economy, and Australia’s industrial transformation. It also examines intergenerational equity. The figures below summarize the government’s outlook; the business and policy implications are interpretations of what those findings may mean in practice.

Key findings at a glance

What the report says about AI and digital infrastructure

The IGR calls AI a defining influence on the economy over the next 40 years. It expects some tasks to be automated and others to be augmented by AI, which can change the mix and demand for labor. Treasury says there was not yet evidence of significant labor-market effects in the material summarized in the report. That is a reason to avoid claims that AI will inevitably eliminate a fixed number of jobs or guarantee an economy-wide productivity boom.

The report’s productivity assumption remains 1.2% per year, consistent with the 2023 IGR. It says AI’s rise and adoption may support achievement of that long-run assumption. That wording is important: the figure is a modeling assumption, while the technology’s actual contribution depends on future implementation and broader economic conditions.

Physical infrastructure is part of the story. Treasury reports that capital expenditure on data centers has nearly doubled since the 2023 IGR, and describes Australia as a leading global destination for data-center investment. More computing capacity can support AI services and digital businesses, but its value to the wider economy depends on how facilities connect to reliable energy, networks, local skills, and productive uses. The IGR treats the energy transition as another major force, so digital expansion and energy planning are linked.

How to interpret the digital-economy implications

For businesses: measure outcomes, not just AI use

The latest Australian Bureau of Statistics business survey provides a useful snapshot alongside the long-term report. In 2024–25, 12% of businesses said they used AI, compared with 1% in 2021–22. Adoption was higher among large businesses than smaller ones, and the ABS cautions that the question measures whether a technology was used, not how intensively or successfully. The survey also found that 16% of businesses cited insufficient staff skills and capabilities as a barrier to using information and communication technologies, while 13% cited uncertainty about costs and benefits.

For a business deciding where to invest, the practical test is whether a tool improves a defined process: turnaround time, error rates, service quality, output per hour, or customer access. Start with a bounded use case, estimate the full cost of data preparation, training, integration, and oversight, and compare results with a baseline. A pilot that saves time for one team may still fail to scale if its data are poor or its workflow creates extra review work.

For workers and educators: build adaptable skills

As routine tasks change, digital literacy and role-specific judgment become complementary skills. Employers can map which tasks are being automated or assisted, then offer training before responsibilities shift. Educators and workforce programs can focus on transferable skills—working with data, checking AI output, privacy awareness, and domain expertise—alongside technical training. The report’s aging projections also point to the importance of designing technology that supports experienced workers and does not assume every user has the same physical ability, confidence, or connectivity.

For governments and infrastructure planners: connect adoption to trust and capacity

AI services rely on data, networks, computing, and electricity. Infrastructure decisions therefore affect economic opportunity as well as resilience and energy demand. Public agencies should assess where digital services can improve access and staff capacity, especially in health and aged care, while retaining usable alternatives for people who cannot or do not want to use an online service. Australia’s National AI Plan similarly groups its goals around building capability, spreading benefits through adoption and worker training, and managing safety risks.

Cybersecurity is a practical constraint. In the ABS 2024–25 survey, 21% of businesses reported experiencing a cyber incident, and 28% reported having no measures in place to prevent incidents. These figures do not predict the effects of AI, but they show why faster digitization should be accompanied by basic controls: access management, backups, staff training, incident plans, and review of third-party services.

A practical checklist for readers

• Business leaders: identify one costly task, set a before-and-after measure, and include training, security, and maintenance in the investment case.
• Workers and students: track how tools are changing tasks in your field and practice checking, explaining, and improving their outputs.
• Investors: distinguish announced data-center or AI spending from evidence of sustained productivity, usable capacity, and returns.
• Public agencies: test whether digital services remain accessible, secure, and useful to older people and people with varied abilities or connectivity.
• Anyone reading the projections: treat the 40-year figures as a scenario for planning. New policy, technology, migration, productivity, or global shocks can change the path.

What the IGR does—and does not—tell you

The report is useful for understanding the scale and direction of Australia’s long-term challenges: slower population growth, a larger aged-care need, reliance on productivity growth, and AI’s potential role. It is not a forecast that digital technology alone will offset demographic pressures, nor does a rise in data-center investment prove that gains will flow evenly to businesses, workers, or regions. Treasury’s projections should be read with their assumptions and uncertainty in view.

For a digital-economy reader, the central question is therefore practical: can Australia convert investment and technology adoption into reliable improvements in output, public services, and living standards while sharing benefits and managing risks? The IGR frames that as a long-run national challenge. Businesses, workers, educators, infrastructure providers, and governments will determine how much of the opportunity becomes real.

Official sources

• Australian Treasury: 2026 Intergenerational Report (released September 21, 2026; includes report downloads and fact sheets).
• Australian Treasury: 2026 IGR fact sheet (headline projections and transition summaries).
• Australian Bureau of Statistics: Characteristics of Australian Business, 2024–25 (ICT, AI use, skills, and cyber incidents).
• Department of Industry, Science and Resources: National AI Plan.