AI Could Add $116B to Australia’s GDP, Ending Decade-Long Productivity Slump

For investors and market watchers, the EY report transforms AI from a nebulous productivity promise into a tangible macroeconomic catalyst: a $116 billion GDP bump and 44,000 new jobs over ten years. That’s equivalent to roughly 4-5% of current GDP, a supply-side shock that could ease inflation pressures just as the RBA struggles with persistent price stickiness. The key question is how quickly these gains materialise and which sectors capture the value first, making regulatory and reskilling policy as important as the technology itself for portfolio positioning.

Australia stands on the cusp of a significant economic transformation, with a new report from EY projecting that artificial intelligence could deliver a 2.4% productivity boost over the next decade—enough to end a long stagnation that has eroded living standards across the country. Released on July 30, 2026, the analysis quantifies for the first time the potential macroeconomic uplift from widespread AI adoption, estimating a $116 billion increase to real GDP and the creation of 44,000 jobs, even as the technology reshapes the workforce. The findings arrive at a critical moment for Australia’s economy, which has suffered one of the steepest declines in living standards among developed nations, with real wages down 5.1% since March 2021 according to an OECD report in July. Labour productivity growth has averaged a meagre 0.3% annually over the past decade, underscoring the urgency of the opportunity AI presents.

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For investors and market watchers, the EY report transforms AI from a nebulous productivity promise into a tangible macroeconomic catalyst: a $116 billion GDP bump and 44,000 new jobs over ten years.

The EY modelling suggests that AI does not simply replace roles but augments human work, leading to net job gains across most industries. Services, healthcare, and professional sectors are expected to see employment lift due to higher productivity and increased real wages fuelling demand. However, capital-intensive sectors such as mining and agriculture could experience a slight decline in headcount. Crucially, EY’s regional chief economist Cherelle Murphy stressed that realising the full 2.4% uplift hinges on two interdependent factors: effective workforce reskilling and the establishment of appropriate regulatory frameworks. While businesses have warned that stringent rules could slow adoption, over 80% of Australians favour tighter governance over AI usage, creating a policy tension that the government must navigate carefully.

The regulatory debate mirrors global challenges: too little oversight risks public backlash and safety incidents that could stall adoption, while overly prescriptive rules may stifle innovation and investment. Murphy argued that clear institutional frameworks would actually build the trust necessary for users to embrace AI, unlocking the productivity gains that models predict. This suggests a path where smart regulation acts as an enabler rather than a barrier, a nuance that will likely shape Australia’s AI policy in the coming year.

From a macroeconomic perspective, a $116 billion GDP boost represents roughly 4-5% of Australia’s current output, making it a transformative force akin to past technological revolutions. The productivity channel is particularly important because Australia’s recent growth has been largely population-driven; productivity improvements are essential to sustainably raising living standards without inflationary pressure. The Reserve Bank of Australia, which has been battling stickier-than-expected inflation, would likely welcome any supply-side expansion that boosts potential output and helps ease cost-of-living pressures.