Energy and AI in race for future

There is little cheer for Jim Chalmers in the latest economic data, which shows government continues to have an oversized share of the domestic economy as global authorities are calling for a decade of spending restraint. Australian Bureau of Statistics figures show government spending grew by 0.8 per cent in the September quarter while government investment increased by 2.4 per cent and total government borrowings were up 40 per cent to $42bn.

The trend is heading in the wrong direction to deliver on the Treasurer’s promise that the economy would transition from an over-reliance on government to private-sector spending for sustainable growth. Instead, we remain locked in a low-growth, low-productivity environment with inflationary pressures driven by excessive government spending, high energy prices and a tight labour market.

The OECD in its latest report on Wednesday said the “main fiscal priority is to progressively reduce structural deficits via greater spending control and well-designed revenue increases”. It said fiscal consolidation “will probably have to be sustained into the 2030s”.

Given the circumstances, the federal government has made the right decision to adopt a light-touch regulatory approach to the rollout of artificial intelligence. The government has rejected the need for a stand-alone AI act, with the technology to be regulated through existing frameworks.

The Australian Industry Group welcomed the approach as “a pragmatic and impactful strategy aimed at ensuring Australians benefit from the productivity enhancement of artificial intelligence while providing measured guardrails to avoid the pitfalls of its implementation”.

It will not be smooth sailing, however. Trade unions have said they will push for a raft of industrial relations imposts that will limit the potential for productivity gains. And more needs to be done to ensure that Australia has the infrastructure necessary to become a global participant in the transformative technology.

There is irony in the government’s insistence that renewable energy represents the next industrial revolution when it is likelier that it will be AI, which depends on vast quantities of stable and affordable electricity to compete. The Albanese government blueprint will attempt to force developers to bring new renewable energy online amid expectations electricity use from the infrastructure will triple by 2030 and put pressure on the grid.

It also will force data centre developers to adopt efficient cooling technologies to limit water use and ensure the growth in AI “supports sustainability, strengthens energy security and drives investment in clean technologies”.

The experience elsewhere is that Big Tech has decided long ago that renewable energy may not be the most efficient route for AI and instead is placing its future bets on nuclear. Moderate Liberal MP Tim Wilson is right to argue that given the future of AI and the current state of the energy transition, the option for nuclear energy should be added to the mix.