Artificial intelligence could lift Australia’s productivity and living standards, but without targeted investment and greater control over data, much of the economic benefit may accrue to overseas companies, according to the UNSW AI Institute’s director Dr Sue Keay.
Keay argues that productivity growth is closely linked to wages and quality of life, and that improvements based on human labour alone have practical limits. “There’s a limit to how much you can improve a country’s productivity just through labour productivity alone, because I’m sure people probably don’t feel that they can work that much harder than they currently are,” she said.
She said past productivity gains have largely been driven by technology, and that AI is likely to be the next major phase of that shift, with potential applications across most sectors of the economy.
AI as a productivity driver
Keay said AI could help automate repetitive work, improve operational efficiency and support decision-making at scale. She also said the technology could help address labour shortages by enabling organisations to maintain output with fewer staff.
“The opportunity with artificial intelligence is that both at an individual level and at a company and governmental level, they can be applied across a whole range of functions,” she said. “If you can start to scale a lot of those solutions and in particular areas where we find it difficult to find people to do work, then that’s obviously an advantage.”
However, she warned Australia could not afford to ignore the shift. “It really isn’t an option for us to just bury our heads in the sand and hope that this technological change won’t impact on us. We have to figure out how we can harness the benefits,” she said.
Risk of an ‘extractive’ AI economy
Keay said the concentration of AI capability among a small number of large foreign companies increases the risk that Australia will pay for tools and services while capturing limited tax revenue or domestic industry development in return.
“Artificial intelligence, probably more than any other transformation in the past, has the very high potential for being an extractive industry,” she said. “The people who are leading the development of these tools and making all of the profits from them are not Australian companies.”
She said reliance on imported AI systems could have long-term economic implications if local alternatives are not developed. “We are purchasing most of our artificial intelligence, particularly from the US, and yet those companies we know tend to pay very little tax here in Australia,” she said.
Keay said Australia should invest in domestic AI capability to ensure more of the economic return is retained locally and to support Australian jobs and tax revenues.
Control of data and sovereignty
Keay also linked AI adoption to questions of data control and national sovereignty, arguing that the ability to build models on Australian-controlled datasets could be a key factor in capturing value and protecting national interests.
“If we have more control of our data, then that lends itself for us to be able to build our own AI-specific models that are beneficial to us and not necessarily to anyone else,” she said.
She warned against accepting what she described as a “one-way flow of information” and said Australia risks losing agency if critical data and AI capabilities are controlled elsewhere. “We can’t be powerless or give up our agency to other countries unless we’re prepared to potentially lose our sovereignty,” she said.
