Opinion article: Australia should not fear the AI revolution

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 new machine age fair was an attempt to understand what rapid technological change meant for Australian workers.

It jumped out of thinker circle Andrew Charlton, and I called regularly at the time to consider the most important changes in our economy.

Turning through the book made it very clear that the pace of change was 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 billion. Today it's over USD 300 billion.

Data centre leader Airtrunk had opened its first two centres in Sydney and Melbourne. It has now been six times as much as it is 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.

The breakthrough in the “large language model” (LLMS) – computer programs trained with large datasets that can be understood and addressed in human language – are driving the “cognitive industrial revolution” that has sparked a booming AI “hype cycle.”

ChatGpt became famous in a few months and reframed how he thought about work, creation and solving problems.

LLM is 7 times faster than the Internet [PDF 1.184 MB] It's 20 times faster than electricity. Rapid Take-Up has driven the biggest increase in the S&P 500 since the late 1990s.

According to US estimates, eight out of 10 workers can use LLM on at least 10% of future workers.

However, businesses are still in the discovery stage, trying to separate reality from the hype and decide which AI to build, buy, or borrow.

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 estimates that AI can increase GDP growth by 7% over the next decade, with the PWC estimated that it could increase global GDP by $15.7 trillion 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 major 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. An increase in cross-border trade corresponds 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 analytics can accelerate and increase problem-solving capabilities and accelerate innovation by reducing R&D costs and skill bottlenecks.

By accumulating more projects commercially, AI could increase investment, increase GDP, and create demand for human expertise.

Some are concerned that recruitment will lead to a significant increase in unemployment, despite AI potentially increasing higher-level employment. The impact of AI on the workforce is uncertain, but there are good reasons to be optimistic.

One study found that over half of LLMS use cases involve workers who repeat the back and forward workers with their skills, allowing them to achieve more skills.

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 conversion will improve your skills and change the nature of your work.

Nevertheless, the impact of AI on the nature of work is expected to be important.

We've seen this play before – more than half of the work people do today are in occupations that didn't exist even at the beginning of World War II.

Some economists suggest that AI can increase occupational polarization – which is difficult to automate and harness technology, but promotes an increase in demand for manual roles over advanced roles to reduce the decline in demand for medium-skilled 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 respond to technological changes. 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.

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, algorithmic 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 institutes in accounting for GDP. Our industry opportunities are vast and diverse, from developing AI software to using AI to unlock traditional industry values.

The market for AI hardware – especially chips – and basic models is 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 believes it may develop areas of comparative advantage [PDF 681 KB] in these markets.

Infrastructure is a clear place to start.

According to Data Costume IDC, global investment in AI infrastructure rose 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.

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. Psiquantum, Investment in AI, AI adopts the centre, developing Australia's first AI safety standards, AI is featured in key technology lists, national capacity planning, and R&D work.

The next step is built on the work of colleagues such as Charlton, Tim Ayers, and before him is Ed Fushik, focusing on at least five things.

• Building confidence in AI to accelerate development and recruitment in key departments
• Invest and encourage high-end and reskills to support our workforce
• It helps attract, streamline, speed and adjust investments in data infrastructure in national interest.
• Promotes the creation of local demand and capacity to promote fair competition in global markets and ensure impact in the AI supply chain
• Working with Katy Gallagher, we use AI to provide safe and excellent public services.

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 there is a broad view, but we are ambitious and optimistic.

By listening and training the work of workers, when treating it as an enabler rather than an enemy, we can deploy artificial intelligence in a way that matches our values.

Making AI more popular with people is not just a matter of decency and choice between prosperity and equity, it is the only way to make the most 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.

Rather than ripping it, not to turn the clock back and pretend this isn't happening, but to turn the algorithm into opportunities for more Australians, they are not victims of the rapid transformation that is gathering pace.