Albanese government spending promises will create budget crisis as AI and credit rating impacts hit

Forecast budget deficits and Albanese’s election spendathon will coalesce just as two other unstoppable forces hit, forcing every working Australian to re-examine their job.

The sheer horror of $70bn a year budget forecast cash deficits, when added to the Albanese election spendathon, creates a crisis.

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Neither the Albanese government nor the Australian community understand the magnitude of the two seismic shifts which vast sectors of business now realise are inevitable. Australians must brace for these two seismic shifts taking place together.

Seismic shift one, as detailed below, is linked in essence to the ranks of people in service and administrative roles that are going to be slashed.

In many cases people in those roles were highly paid and had mortgages. On the other hand, the ranks of those who are actually performing vital tasks – the so-called doers – will increase. Every working Australian needs to examine their jobs.

Seismic shift two is how, while the post-election Australian economy should open strongly because of the avalanche of money to be spent by the Albanese government, in about 18 months – the timing is uncertain – the sheer horror of $70bn a year budget forecast cash deficits, when added to the Albanese election spendathon, will create a crisis.

The rating agency led by S&P warned the Australian community that both parties proposed spending at an unsustainable level. But the Albanese government was more unsustainable and voters have given them a free rein. The rating agencies and the bond markets will eventually bring the spree to a halt.

And if the unsustainable spending breakdown coincides with a massive global downturn created by the Trump measures, the crunch will be really serious because our mineral taxation revenue will slump.

In such a scenario, unless the spending splurge is stopped quickly, we could become an Argentina.

Accordingly, those who see themselves as vulnerable to seismic shifts need to consider moving to the ranks of the “doers”. Training may be required.

Artificial intelligence and employment

Like many Australians, I have been reading about artificial intelligence, but the full impact came home to me when a young, married acquaintance with a mortgage told me he had secured a $200,000-plus job as a researcher in a medium to large scale enterprise.

He had beaten many others to the job, so felt good. Then he went in to consummate the deal, only to find that the board had decided not to appoint anybody but rather to spend $75,000 on AI to do the job. Research people around the land – including lawyers – who simply bring together available facts are in great jeopardy.

Those who research and come up with totally new ideas out of material they research will remain valuable.

The vast majority of people seeking information via call centres want routine data that artificial intelligence using voice transmission can provide. Picture: iStock

Another big vulnerable area is call centres. The vast majority of people seeking information via call centres want routine data such as the balance of an account, how to pay and other questions that AI using voice transmission can provide.

Indeed, AI can communicate in a wide variety of languages. Of course, there will be more complex questions that AI can’t handle, and the key to any system will be to get the customer out of the AI system once the complexity is recognised. The shift has started in small call centres. The big call centres are likely to follow.

Australian hospitals have, on average, roughly 2.5 administrative roles for every nurse/paramedic. The correct ratios should be about 9 or 10 per administrative role. AI can enable many hospitals to get to a proper ratio. Many of the administrative people came up through the nursing ranks and need to be returned to being a “doer”.

This seismic shift will be accelerated by Albanese policies led by the plan to enable employees who are being paid less than $175,000 to poach customers and suppliers.

Later, people on higher salaries may be given the right to poach customers and suppliers. This is a disaster for enterprises where goodwill is the main asset.

To that we add union representatives throughout the business community. This makes employing people far riskier than it has been to date, so enterprises will look to AI to reduce their vulnerability.

Reducing costs with AI

And in China I am reading about how a person ordered room service food. They opened their hotel room door and found a robot. All they had to do was lift the lid and take the food out. But they had an instructive “discussion”.

All hotels, cafes and restaurants in Australia will need to look very hard at how they use their staff and what is available from AI. The same applies to retail stores battling online retailers. However, in the retail sector the skill of a good salesperson on the floor of a store should never be underestimated.

In some ways the unions, in introducing same work same pay, are in fact lifting the salaries of “doers”, and while the long service leave requirements will send many enterprises to the wall, some would have collapsed anyway. The employees may get their long service leave.

The seismic shifts are being discussed in economic, business and technology media but are not being well communicated to the general population.

Meanwhile, in the government sector there is scope for dramatic reductions in costs without reducing services. But they are not ready, and for the most part do not have the skills. At one stage in the US it was thought the DOGE operation of Elon Musk would apply AI to enable the US government to maintain services at a far lower administrative cost.

Sadly, DOGE got diverted into cutting out services, which soured the whole operation. The Victorian government looks as though it is going to be forced to reduce the size of its public service. It’s a sign of what is ahead.

Originally published as Albanese government spending promises will create budget crisis as AI and credit rating impacts hit