Government-held data on Australians could be shared to drive AI revolution

And the Commonwealth could use direct investment to drive the nation's uptake of artificial intelligence and seek to influence the market through procurement choices.

Treasurer Jim Chalmers on Monday unveiled the 2026 Intergenerational Report, which projects outlooks for the economy and the Australian government's budget over the next 40 years.

He described AI as one of five "accelerating shifts" that would have an outsized influence on Australia's economy, with the potential to transform productivity and improve the federal budget's bottom line.

"Government spending over the next 40 years is expected to increase by much less than previously thought ... less than a third of what was forecast in 2023, just 1.1 per cent," Dr Chalmers said.

Each extra productivity growth point added by AI after 2030 could also improve the federal budget bottom line by 0.07 percentage points and cut gross debt by 0.3 per cent within a decade.

"AI will play a pivotal role in reaching long-term productivity growth of 1.2 per cent - and higher if productivity gains accelerate over time," he said.

The report, seen by The Canberra Times, devotes a chapter to artificial intelligence that flags ways to approach and try to shape the AI revolution, while also warning the impact of automation remains deeply dependent on how Australians use it.

"Governments have an important role in shaping the conditions for successful AI adoption," the report said.

"This includes adopting AI within the public sector itself, to build public trust in the technology, ensure its benefits are widely shared and make services more affordable, accessible and responsive."

It said improving access to "relevant, high-quality data" could "support innovation and competition among businesses."

Some datasets held by government agencies could "offer significant value to businesses, when made available with appropriate protections for privacy and security".

The report noted that the Albanese government was yet to respond to a statutory review of the Data Availability and Transparency (DAT) Act 2022, which recommended expanding access to data held by government agencies for uses deemed to be in the "public interest".

Regulations should be geared towards encouraging firms to innovate in competitive markets - with potential government intervention, the report said.

"In times of major structural change, or nascent technologies, governments can also have an important role providing direct investment to further Australia's national interest and economic resilience," it said.

"Governments may also influence the competitiveness of product markets through their procurement choices."

But Australian firms would not need to develop a sovereign AI model to become a leading player in its development, the report said, and should instead specialise in supportive technologies, or "targeted sovereign capability making Australia indispensable to global value chains."

To date, federal investment in AI has been limited to a grant program announced in the May budget, with applications for the $50 million AI Accelerator Fund to open early next year.

Tech researchers have previously called on the government to pour as much as $4 billion into sovereign AI capability to reduce Australia's reliance on US firms that have dominated the market.

The statutory review of the DAT Act, handed to Finance Minister Katy Gallagher in November, recommends that the government legislate to "embed a default posture of sharing data, with data custodians able to refuse requests in limited circumstances."

Access to public data - currently available to accredited government entities and universities, including medical research institutes - could be expanded to "trusted not-for-profit and other non-government organisations," the final report of the DAT Act review by Stephen King said.

It did not recommend making government-held data available to private, for-profit businesses.

The government needs to decide whether to legislate to continue the DAT Act, which is due to sunset on April 1, 2027, and what, if any, changes to make.

Electronic Frontiers Australia has warned of risks to Australians' "fundamental human rights, liberties and privacy" if data sharing by government agencies becomes too broad.

The 2026 Intergenerational Report said AI's expected positive effects on productivity and economic growth would "generally strengthen the budget through higher incomes and tax receipts" and could "reduce the cost or improve the quality of public services".

But productivity gains could be partially offset if they led to lower prices rather than higher incomes, and if labour market changes led to a spike in demand for government support.

The report said AI could dramatically improve the nation's productivity by 2066, if bullish forecasts of the extent to which tasks can be automated prove true - with potential for the technology to accelerate "the production of ideas itself".

Government policy on AI will need to remain "flexible and adaptive" to match pace with its uncertain future development, the report said.