It seems like it was a lifetime ago, but it was in 2017 that former NBN CEO Mike Quigley and I wrote a book about the impact of technology on our labor market.
Change in Employment: The fair in the new age of machinery was our attempt to understand the rapid technological change and its implications for Australian workers.
It jumped out of thinker circle Andrew Charlton, and I called regularly at the time to consider the biggest and most consequential changes in our economy.
Turning through the book makes it very clear that the pace of change since then is breathtaking.
The story of Australia's high-tech companies gives a sense of scale.
In 2017, the pioneer cloud design camber was valued at US$1.2 billion. Today it's over USD 300 billion.
The leading DataCentre Company Airtrunk has opened its first two centres in Sydney and Melbourne. Currently, there are almost 12 of them in the Asia-Pacific region, supported by one of the world's largest investors.
We understand that a stirring and changing world is not only a source of opportunity, but it also creates anxiety for Australians.
Technology has changed, but our goals as leaders remain the same.
Our responsibility is to make Australian workers, businesses and investors beneficiaries change rather than victims.
It is more important than ever in the new world of artificial intelligence.
ai 'hype cycle'
The breakthrough in the “Large Language Model” (LLMS) – computer programs trained with large datasets that can be understood and addressed in human languages – are driving the “cognitive industrial revolution” that has sparked a booming “hype cycle” of AI.
ChatGpt became a popular name in a few months, reshaping the way you think about work, writing, and problem solving.
LLM is 7 times faster than the Internet and 20 times faster than the electricity. The rapid symbolism has caused the biggest rise in the S&P 500 since the late 1990s.
According to US estimates, eight out of ten workers can use LLM for at least 10% of future labor.
However, businesses are still in the discovery stage, trying to separate reality from the hype and decide which AI to build, buy, or borrow.
Two major impacts
Artificial intelligence will completely change our economy. Every aspect of life is affected.
I am optimistic that AI will be a force for good, but it is realistic about risk.
Nobel Prize-winning economist Darren Acemoglu estimates that AI can increase productivity by 0.7% over the next decade, but estimates for some private sectors are up to 30 times higher.
Goldman Sachs expects AI to increase gross domestic product (GDP) growth by 7% over the next decade, and estimates that PWC could raise global GDP to 15.7TN $15.7TN by 2030.
The wide variety of estimates is attributable in part to a variety of views of the time it takes to integrate AI into business workflows, and the time it takes to integrate the industry's market size or cost base.
However, if some of the predictions turn out to be correct, AI could be the most transformative technology in human history.
At its best, it converts energy into analysis and more productivity into a higher standard of living.
It is expected to have at least two important economic overall impacts.
First, reduce the cost of information processing.
One example of this is how eBay's AI translation tool removed language barriers to promoting international sales. The increase in cross-border trade is equivalent to buyers and sellers close to each other by 26%, effectively reducing the distance between Australia and the global market.
This is one reason why the World Trade Organization predicts that AI will reduce trade costs and increase trade volume by up to 13%.
Second, cheaper analysis accelerates and increases problem-solving capabilities. This allows for faster innovation by reducing research and development (R&D) costs and skill bottlenecks.
By accumulating more projects commercially, AI could increase investment, increase GDP, and create demand for human expertise.
Work concerns
Despite the possibility that AI could generate more sophisticated, highly paid jobs, some are concerned that recruitment will lead to a significant increase in unemployment. The impact of AI on the workforce is uncertain, but there are good reasons to be optimistic.
One study finds that over half of LLMS use cases involves strengthening workers' skills so that workers can repeat their skills back and forth and beyond and achieve more.
Another recent study found that current LLMs often automate only a few tasks within the role, freeing up employees and adding more value rather than reducing working hours.
These are some of the reasons why we hope that AI transformations will improve skills and change the nature of the job, rather than causing widespread or long-term structural unemployment.
Still, we expect the impact of AI on the nature of work to be substantial.
We've seen this play before. More than half of the jobs people do today are in occupations that did not exist even at the beginning of World War II.
Some economists suggest that AI may increase occupational polarization. It is difficult to automate and drives increased demand for highly skilled roles of technology, but decreases demand for medium-sized tasks.
However, many workers in these occupations may be able to leverage AI to complete more specialized tasks and take on more productive, well-paid roles. In this transition, the middle makes the most of it and is at the most critical.
There is also the risk that AI could increase short-term unemployment if investment in skills is not keeping up with the changing nature of jobs.
Government plays an important role here, and the big motivation for record-breaking investments in education is to ensure that skills are in line with changing technology. However, it is also directed towards businesses, unions, and the broader community to ensure that the human capital and skills needed to grasp this opportunity continue.
Australian opportunities
Being optimistic about AI is not to dismiss risks that are not limited to the labour market.
The ability of AI to quickly collate, create and disseminate information and disinformation makes people more vulnerable to fraud, poses risks to democracy.
AI technology also impacts privacy, workplace autonomy and, in some cases, personal security, significantly reducing the cost of monitoring and increasing effectiveness.
There are issues of ethics, inequality, algorithm bias, and legal liability for decision-making when AI is involved.
These new technologies also put pressure on resources such as energy, land, water and communications infrastructure that impact carbon emissions.
But we are good at managing risk and maximizing opportunities.
In 2020, Australia ranked sixth in the world in terms of AI companies and research institutions when it came to account for GDP. Our industry opportunities are vast and diverse. From developing AI software to using AI to unlock the value of traditional industries.
The market and basic models of AI hardware, especially chips, are very concentrated. Approximately 70% of the widely used basic models are developed in the US, with three US companies claiming 65% of the global cloud computing market.
But even further downstream, the AI software and services market is dynamic, fragmented and more competitive. The Productivity Committee considers the possibility of developing areas of comparative advantage in these markets.
Infrastructure is a clear place to start.
According to International Data Corporation, global investment in AI infrastructure has increased 97% in the first half of 2024 to US$47 billion, reaching US$20 billion by 2028. We are the top five global destinations in data centers and the world leader in quantum computing.
Our land, renewable energy possibilities and reliable international partnerships make it an attractive destination for data processing.
From capacity investment schemes to future plans for Australia, our substantial agenda is key to this. They are good examples of our strategies to engage and invest, rather than protecting and retreating.
The road ahead
Our intention is to regulate as much as necessary to protect Australians, but as little as possible to encourage innovation.
There is already a lot of work going on. Investment in quantum computing company Psiquantum and AI recruitment centres, development of Australia's first voluntary AI safety standards, key technology lists, national capacity planning, and R&D work.
The next step will focus on at least five things based on the work of colleagues such as Digital Economic Aide Andrew Charlton, Minister of Science, Tim Ayers and former Minister of Science Ed Fusick.
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Building confidence in AI to accelerate development and recruitment in key departments.
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We invest and encourage skills and reskills to support our workforce.
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It helps attract, streamline, speed and adjust investments in data infrastructure in the national interest. This is cost-effective, sustainable and makes the most of its benefits.
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It promotes the creation of local demand and capacity to promote fair competition in global markets and ensure impact in the AI supply chain.
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Working with Finance Minister Katie Gallagher, we used AI to provide safer and better public services.
Beneficiaries of change
Artificial intelligence has a major impact on the economic resilience, productivity and budget sustainability, which is a key concern for the economic reform roundtable I am convening this month. I'm now setting these ideas to explain what we're going to work on and how to do it.
AI is controversial and, of course, has a broad view, but we are ambitious and optimistic.
If we treat it as an enabler rather than an enemy, we can deploy AI in a way that matches our values.
It's not just about issues of prosperity and equity and choice that make it possible for people to use AI well. It's the only way to get the most out of people and Technology at the same time.
Charting AI's responsible middle courses is no longer beyond us. This maximizes benefits and manages risk. It's not about ripping it, it's about turning the clock back and pretending that this isn't happening, it's not about being a victim of the rapid transformation that's gathering pace, turning the algorithm into opportunities for more Australians to become beneficiaries.
