A lot can change in a generation.
Between 1760 and 1800, a worker in the textile industry went from spinning one thread at a time to operating a mule spinning 400 simultaneously.
In just 40 years, Britain's cotton output increased tenfold.
Other industries - iron and steel, coal and steam - weren't far behind.
The world today is the result of the technological leaps that played out in those factories and coalfields.
But the future will be shaped by the bigger, faster leaps happening right now, in frontier labs and start‑ups pushing boundaries in science and service delivery.
AI is shaping up to be the biggest economic transformation in our lifetime.
It will impact every part of our economy and society, in every corner of our country.
Our job as leaders in government, business, and the community more broadly is to ensure Australians are beneficiaries, not victims, of all this accelerating change.
Higher productivity, higher investment and higher living standards are all there for the taking if we maximise the substantial economic opportunities of this technological revolution and minimise the serious risks.
When I release the 2026 Intergenerational Report in a few weeks' time, I'll set out the major shifts playing out in our economy and society over the next 40 years, and the challenges and opportunities they present.
AI will feature much more prominently compared to the report I released in 2023.
From the early chatbots of 2022 to today's agentic models solving complex problems with hundreds of steps, frontier labs are now reaching new milestones in a matter of weeks, not years.
Beyond this rapid pace of development, AI has distinctive features which mean its economic impact could be profoundly different from past waves of technology.
It has the potential to be self‑developing, has high upfront costs but much lower marginal costs, and could have a greater impact on productivity in services - unlike past tech shocks where gains are usually confined to the tradeable sector.
For many reasons, it presents an enormous opportunity, along with new risks, legitimate concerns and anxieties.
Every advanced economy is grappling with how to lift productivity, including Australia.
At the Economic Reform Roundtable last year, I described higher living standards achieved through higher productivity as our holy grail.
Productivity growth has been too weak for 2 decades.
That's why we're delivering the broadest productivity agenda since the 1990s - cutting red tape, lowering taxes for businesses and start‑ups, incentivising innovation and encouraging more efficient capital allocation in the economy.
This work is essential, but long‑term productivity growth also depends on new waves of technological change and how they are adopted, adapted and diffused right across the economy.
That next wave has now arrived.
New Treasury analysis describes AI as 'the first substantive, credible global productivity growth accelerant in almost 2 decades.'
In other words, it can help lift productivity performance and living standards despite significant global volatility which is intensifying pressures at home.
It has the potential to unlock new well‑paid jobs and new ways of working, including in the care economy that Australia will increasingly rely on as our population ages.
If we get this right, we can attract billions more in investment, grow our AI sovereignty, position Australia as the business partner of choice in our region, and create new high‑value opportunities that combine workers' expertise and experience with new tools and training.
We're already seeing the impacts of the global investment boom in AI inputs and infrastructure. The IMF estimates this investment could push global growth 0.3 percentage points higher this year.
That's playing out in Australia too, particularly in data centres, where the pipeline of investment is an estimated $150 billion by 2030 - around 5 per cent of today's nominal GDP.
This is only the start of the economic opportunity that AI presents.
Achieving a higher productivity trajectory depends on how we encourage adoption and diffusion, uplift skills, attract talent, and grasp opportunities in more parts of the AI supply chain, including training new models here.
It means helping more firms, especially small and medium businesses, overcome the barriers to AI adoption.
It also means encouraging investment and uptake in the safe and sustainable way that Australians expect, while ensuring the benefits are broad‑based and in the interests of workers.
That's why the vision the Prime Minister set out in July, and the work of his ministers, is so important.
Our Australian standards for AI will be world‑leading, giving businesses the confidence to invest and communities the safeguards they expect.
They will build on the work we've already done to secure favourable terms for Australian AI start‑ups and give businesses and workers the tools to adopt AI in their day‑to‑day.
And they will be informed by the work we are doing to measure and manage impacts on the labour market.
We are well positioned to be a big winner in this AI economic revolution if we get this right.
We are better placed, better prepared and have a better plan than most other countries - and the IGR will make that clear.
Through collaboration across the economy and sensible management of the substantial risks, technology can help us secure that holy grail of higher living standards and higher productivity in the interests of our people.
That makes me optimistic that Australians can be beneficiaries of the accelerating change happening all around us in the decades to come.
