ASIA
01 September 2026
Australia’s real AI challenge
What is Australia’s real AI challenge?
Australians are in a tizzy about Artificial Intelligence (AI). Many white and blue colour jobs could be wiped out. ACTU secretary Sally McManus said “Australians don’t trust AI because of the lack of clear benefit for working people”.
Data centres are popping up, seemingly everywhere, consuming loads of electricity and water. As of March, Australia had 162 operational data centres. Another about 130 centres are proposed, taking Australia to nearly 300 operating or planned facilities.
According to the Australian Treasury, about two-thirds of the expenditure on data centres was going toward imports, meaning the money ultimately flowed out of Australia. A construction boom would still benefit Australian workers and companies, though the Treasury said there would be increased competition for resources like labour, concrete, copper and electrical equipment.
But there is more to it than that. After all, many analysts compare AI to the industrial revolution, the advent of electricity, or the arrival of computers and the Internet. Surely AI has the potential to lift Australia’s chronically sagging productivity.
The Treasury has reportedly identified AI as the first credible accelerator of global productivity growth in almost two decades. AI will “push out the global productivity frontier” and could boost Australian productivity growth to between 1.5 and 2 percent per year over the next decade.
But the Treasury is hedging its bets. It’s keeping productivity growth forecasts at the current expectation of 1.2 percent per year, and says AI impacts will be “uneven.” This is of critical importance, since without higher productivity, real wage growth and living standards stall or fall.
Australia risks missing out on an AI economic boom due to 'slow' business uptake. While two-thirds of businesses in Australia report adopting AI in some form, less than 10 per cent describe their adoption as significant. Information, telecommunications, professional services, finance and insurance are presently having the highest rates of adoption.
Large parts of Australia's economy, like health, education, construction and tourism are considered much harder to transform with AI. Treasury said the mass AI jobs wipe-out many feared had not materialised in Australia so far, with most studies finding "limited impacts" on the labour market to date.
There is a risk of a two-speed economy as larger firms move faster because they have more data, greater access to skilled workers and more capacity to pay for the organizational changes required to make AI useful. Achieving a higher productivity trajectory depends on how we encourage adoption and diffusion, uplift skills, attract talent, and grasp opportunities in more parts of the AI supply chain, including training new models here.
Further, federal and state governments will need to determine how existing laws apply to AI systems and address long-standing barriers to competition, infrastructure and business growth. The Productivity Commission’s Stephen King said that the government needs to conduct a “legal gap analysis” to ensure “all our laws and regulatory structures are fit-for-purpose for AI.”
Data centres are popping up, seemingly everywhere, consuming loads of electricity and water. As of March, Australia had 162 operational data centres. Another about 130 centres are proposed, taking Australia to nearly 300 operating or planned facilities.
According to the Australian Treasury, about two-thirds of the expenditure on data centres was going toward imports, meaning the money ultimately flowed out of Australia. A construction boom would still benefit Australian workers and companies, though the Treasury said there would be increased competition for resources like labour, concrete, copper and electrical equipment.
But there is more to it than that. After all, many analysts compare AI to the industrial revolution, the advent of electricity, or the arrival of computers and the Internet. Surely AI has the potential to lift Australia’s chronically sagging productivity.
The Treasury has reportedly identified AI as the first credible accelerator of global productivity growth in almost two decades. AI will “push out the global productivity frontier” and could boost Australian productivity growth to between 1.5 and 2 percent per year over the next decade.
But the Treasury is hedging its bets. It’s keeping productivity growth forecasts at the current expectation of 1.2 percent per year, and says AI impacts will be “uneven.” This is of critical importance, since without higher productivity, real wage growth and living standards stall or fall.
Australia risks missing out on an AI economic boom due to 'slow' business uptake. While two-thirds of businesses in Australia report adopting AI in some form, less than 10 per cent describe their adoption as significant. Information, telecommunications, professional services, finance and insurance are presently having the highest rates of adoption.
Large parts of Australia's economy, like health, education, construction and tourism are considered much harder to transform with AI. Treasury said the mass AI jobs wipe-out many feared had not materialised in Australia so far, with most studies finding "limited impacts" on the labour market to date.
There is a risk of a two-speed economy as larger firms move faster because they have more data, greater access to skilled workers and more capacity to pay for the organizational changes required to make AI useful. Achieving a higher productivity trajectory depends on how we encourage adoption and diffusion, uplift skills, attract talent, and grasp opportunities in more parts of the AI supply chain, including training new models here.
Further, federal and state governments will need to determine how existing laws apply to AI systems and address long-standing barriers to competition, infrastructure and business growth. The Productivity Commission’s Stephen King said that the government needs to conduct a “legal gap analysis” to ensure “all our laws and regulatory structures are fit-for-purpose for AI.”