AI is set to boost productivity and will have a ‘profound’ impact on the jobs market: Treasury
An analysis by the Treasury forecasts that AI has the potential to have a bigger impact on high-skilled and cognitive jobs, not just physical and routine roles.
Artificial intelligence (AI) has the potential to significantly boost Australia's productivity and have a profound impact on the jobs market, according to a detailed analysis prepared by Treasury for Treasurer Jim Chalmers. As of March, Australia has 162 operational data centres, with another 130 proposed, bringing the total to nearly 300 facilities. The government is considering legislation to regulate the energy and water usage of these data centres.
The analysis suggests that AI could support the long-term growth in productivity of 1.2% annually, but it will not be sufficient alone. In fact, labour productivity declined in 2024-25 and has been mostly flat over the past decade. To achieve the assumed long-term productivity growth, there must be significant improvement in growth during the transition period.
The analysis also highlights that AI adoption varies across sectors, with the highest rates found in information, telecommunications, professional services, finance, and insurance. However, only two-thirds of businesses in Australia report adopting AI, with less than 10% describing their adoption as significant. This may be due to the early stage of AI development and the varying ways AI can be used.
While AI has the potential to augment high-skilled non-routine and cognitive jobs, it may also automate some tasks performed by high-skilled workers. This could lead to a more profound impact on the labour market compared to past technology waves. The ability of the labour market to adjust will depend on factors such as the magnitude and timing of the positive technology shock, adoption and diffusion of AI, and policy settings.
Higher investment in AI could lead to changes in the "real neutral interest rate," which is the point at which monetary policy is neither restricting nor stimulating the economy. AI hyperscalers are increasingly resorting to issuing debt to fund their capital expenditure programs, indicating a growing demand for global savings on AI-related projects.
This could be partially offset by increased household savings, either due to precautionary measures or expectations of a longer retirement from AI advancements driving longer life expectancy. However, if productivity impacts are lower than expected or external factors like geopolitical risks affect investment, this pressure could be reduced.
Written by urgent.news from The Conversation AU's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
