Westpac warns that Australia's end of a mining boom could lead to an average income loss of $75,000 over the next decade, driven by declining mining royalties and sluggish productivity, which threaten to diminish living standards.

In response to these economic challenges, Treasurer Jim Chalmers has prioritized productivity improvements as a central goal for the Albanese government’s second term, with an upcoming economic reform roundtable scheduled from August 19 to 21.

Historically, the mining industry has played a crucial role in supporting Australia's public services and cost-of-living support through tax revenues, despite accounting for less than 2% of employment and 15% of economic output.

From 2000 to 2020, mining contributed over half of the gains in Australian living standards, mainly due to high iron ore export prices and significant investments, but its influence is now waning.

Experts suggest that boosting productivity through artificial intelligence could counteract economic downturns, with the IMF estimating AI could increase productivity growth by up to 1.5% annually.

Since the 2008 Global Financial Crisis, mining investment has stalled, and with a declining outlook for commodity prices, a new commodities super cycle appears unlikely, further impacting future economic growth.

Iron ore prices, currently around US$103 per tonne, are projected to fall to US$84 by early 2027 due to peaking Chinese demand and new supply sources, posing a significant risk to the economy.

This economic outlook coincides with a three-day policy summit on productivity hosted by Treasurer Jim Chalmers, involving 28 businesses and industry groups, emphasizing the government’s focus on reform.

To mitigate the impact of falling commodity prices, improvements in productivity through changes in business practices, policy, and culture are deemed essential.

Living standards in Australia are expected to stagnate from 2022 to 2030, potentially costing a household of four around $300,000 in income compared to scenarios of continued growth.