Dr Sue Keay, Director of the UNSW AI Institute, says there is a limit to how much productivity can be improved by human effort alone.
Artificial intelligence has the potential to transform Australia's productivity — but without strategic investment and control, much of the benefit could flow offshore.
That's the view of Dr Sue Keay, Director of the UNSW AI Institute, who says productivity growth is closely tied to Australians' quality of life and AI may be critical to improving it.
"Productivity can be directly linked to our standards of living. And so typically if you start to see productivity stagnating, then that can influence how much we can afford to buy from other countries and generally how comfortable we feel with the wage that we're all receiving," Dr Keay said.
Productivity, the efficiency with which goods and services are produced, underpins economic growth, wages and living standards. But Dr Keay says efficiency gains are much harder to achieve in terms of output from people, especially compared to from technological developments.
"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.
"The main way that we've seen a lot of productivity improvements in the past has been related to technological advances."
Artificial intelligence has widely been hailed as representing the next phase of that shift, with the potential to operate across almost every sector of the economy.
AI as a productivity driver
Dr Keay, talking on UNSW's Engineering the Future podcast, said AI can help automate repetitive work, improve efficiency and support decision-making at scale.
The technology could also help address labour shortages in key industries, enabling organisations to do more with limited resources.
"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."
But Dr Keay warned that the shift is inevitable, and Australia cannot afford to fall behind.
"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 added.
Risk of an 'extractive' AI economy
While AI offers significant economic opportunity, Dr Keay said there is a risk that Australia could miss out on much of the value it generates.
That's because much of the global AI capability is currently concentrated in a small number of overseas companies.
"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."
As a result, Australian organisations often rely on imported technologies, and without intervention that could have long-term economic consequences.
"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," Dr Keay said.
"That will have devastating consequences unless we find ways to either develop alternatives, and really invest in Australian AI as a competitive advantage to make sure that we are generating Australian tax-paying companies to support our workforce."
Control of data and sovereignty
Dr Keay also says that control of data will be critical to ensuring Australia can benefit from AI.
"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 added.
"We have to stop unquestionably accepting that this kind of one-way flow of information, which is very extractive, is actually acceptable.
"We can't be powerless or give up our agency to other countries unless we're prepared to potentially lose our sovereignty."
