Conflict, AI and inflation drive Treasury shift towards resilience

Treasury has shifted its advice to give greater emphasis to economic resilience as the government faces difficult choices to protect the country from an onslaught of economic risks from conflict, advancing artificial intelligence and globally rising inflation, the treasury secretary has revealed.

While economic shocks were not new, the “unusually wide range of challenges” this year had shaken treasury’s world view and forced it to respond in new ways to mitigate the impact of great power competition, Jenny Wilkinson told the United States Studies Centre economic security forum in Sydney on Monday.

Australia had shown “remarkable resilience” during the 2008 global financial crisis, the 2020 COVID-19 pandemic and the 2022 energy shock from Russia’s invasion of Ukraine, due to its flexible economy and the government’s “fiscal space” to respond, “but these defences are no longer enough,” she said.

“Economic security risks are rising owing to…