Fear not, AI is a means to enhance human prosperity

Ai-Da Robot, the world's first ultra-realistic humanoid robot artist, at the House of Lords in London last week. Picture: Getty Images

In 2019, former German foreign minister Joschka Fischer issued a blunt warning: “In the 21st century, power will be determined not by one’s nuclear arsenal but by a wider spectrum of technological capabilities … Those not at the forefront of artificial intelligence and big data will inexorably become dependent on, and ultimately controlled by, other powers. Data and technological sovereignty, not nuclear warheads, will determine the global distribution of power and wealth.”

Events in Europe such as Vladimir Putin’s nuclear sabre-rattling against Ukraine and Australia’s signing up to the AUKUS security pact do not mitigate this reading.

Front of mind for many Australians, however, is the Terminator-like threat AI poses towards jobs. For too long this narrative has been uncritically accepted. As the five-month-old federal Labor government finds its feet, it’s time to adopt an AI narrative not grounded in science fiction. The Terminator is not coming to a workplace near you. AI is little closer to achieving human-level intelligence than it was 20 years ago and, even if it were, it is unable to tackle tasks such as plumbing, painting and paving. Yet Australia is missing out on the productivity benefits AI enables. While our competitors race ahead, we lie immobilised by fictional fears.

As the looming federal budget dominates national debate, it’s time we tackled the AI job destruction myth. Automation entails the ability of machines to perform jobs typically performed by humans – such as the advent of the car displacing thousands of jobs in shovelling horse manure from the streets. Yet post-industrial revolution era jobs were better paid and more numerous. Focusing on the relatively few jobs lost in a bygone era is misguided.

AI takes automation a step further. It uses large amounts of data to learn some of the tasks humans do, but faster and cheaper. Manually searching the web for a story is something a person can do by looking at each web page in turn, for years. AI can do it in a fraction of a second. This means workers can get on doing things AI can’t.

An effective solution to AI-mythbusting starts with a proper diagnosis. First is what is termed the displacement effect, whereby new technologies can lead to a substitution of jobs performed by workers. Job loss fears are thus real and will continue. Australians still suffer nightmares from the vast displacement of jobs during the 1990s. This was caused by a race to the bottom through tariff reductions and a quest to lower comparative production costs but was blamed on automation.

Yet the displacement effect is still not absolute. Even with the collapse of local textile and car manufacturing industries, Australia’s gross domestic product and standard of living rose, albeit with postcodes of localised inequality until Covid. Why? Because a second dynamic – the skill complementarity effect – increases in jobs and tasks necessary to use, supervise and grow from new technologies. Spreadsheets were the killer app of personal computers and replaced hundreds of jobs in performing arithmetic manually. But the accounting industry thrived: new forms of modelling dramatically increased productivity and profitability. Thousands of accounting jobs were created and the economy thrived.

Driverless electric vehicles will replace some jobs driving and repairing dirty and dangerous modes of transport. However, the economic benefits of reducing transport costs will be far greater than just the software and supply chain jobs created. The classic case for the skill complementarity effect is in Germany switching from coalmining to the exporting of the equipment and technology to mine coal.

The third effect is the productivity effect; lower prices and higher disposable incomes drive increases in consumer demand. Witness the burgeoning amount of speciality retail online.

Finally, there is the low cost of capital effect. AI is increasingly embedded in newer, cheaper products accessible to more people. Do you drive to work or pick up the kids from school using Google maps? Need an idea for a small business or cost of an app to be rolled out? More than 70 per cent of our Accelerating Commercialisation grants have AI as central to their business idea.

These are global trends. Data is now a more valuable commodity than oil and is globally mobile. It is not located spatially, as per manufacturing. Moreover, as federal Labor ministers such as Ed Husic and Richard Marles have been at pains to point out, AI-led defence investment is crucial. Think swift, agile and cyber-strong drones, not the heavy iron platforms of bygone conflicts.

Therein lies Australia’s opportunity: build AI-based businesses, fix our poor venture capital market and invest in AI. We produce just 100 AI postdoctoral students a year, unlike thousands in comparable countries.

We can’t wait until the crisis of job displacement occurs. Under the former government, Australia ranked near the bottom of economies investing in AI R&D – a mere $30m compared with the billions spent in comparably sized countries, let alone China and the US. Canada’s Ottawa alone has invested billions in AI research.

Given the pace of change, Australia can’t afford to rely on a pure market-based solution. Our competitors aren’t taking that luxury. The AI centuries are upon us. If seized now, AI will make our country safer, wealthier and full of great jobs.

Nick Dyrenfurth is executive director of the John Curtin Research Centre. Adam Slonim is the centre’s secretary and director of artificial intelligence start-up Vestia.AI.