Businesses ramp up spending as $155 billion data centre boom outpaces mining
As groundbreaking research shows, AI is beginning to undermine the prospects of workers, including clerks and telemarketers; just as Australian businesses are embarking on a $155 billion data center spending spree that is growing faster than the mining boom of 2010.
Research by Monash University economist Zac Gross, based on nationwide payroll data, finds that while there are early signs that the AI revolution is softening some parts of the job market, it has not yet affected the wages of the people most exposed to technology.
Data from the Australian Bureau of Statistics has revealed that businesses spent a record $6 billion on AI-related equipment and machinery in the first three months of the year; This is up 400 percent in one year.
Factoring in new buildings, businesses spent a record $21.8 billion on AI and IT in the last 12 months. All other parts of the economy, including mining, either remained stable or saw capital expenditures decrease slightly over the period.
Gross said his research, taken directly from businesses’ payrolls, shows that the impact of big language models has not yet reached the nation’s labor market.
But it has seen weaker hiring in occupations that face the threat of being replaced by artificial intelligence between 2022 and now. These included jobs such as accounting clerks, keyboard operators, positions in human resources, and telemarketers.
Although some job openings are weaker than others and some companies are laying off staff, the overall job market has not yet been disrupted by AI, Gross said.
“These results do not cancel the AI apocalypse, but they certainly postpone it,” he said.
“We see relatively little weakness in the labor market, even in professions that are heralded for death, such as software engineers and telemarketers.
“Although AI has become an important part of their jobs, software engineers’ earnings have increased around the national average. The same goes for telemarketers and call center operators, who could replace AI.”
Gross said jobs in consulting or management professions that may be at risk from AI, such as bank employees and financial advisors, are softer in 2022, but not as troubled as jobs that can be more easily replaced by technology.
His research also suggested that AI has not yet impacted workers’ wages.
But it found that companies that have adopted AI have experienced stronger earnings growth than companies that have not yet used it. However, in these companies, the salaries of people who were at risk of having their jobs replaced by artificial intelligence were not increasing as fast as those who were away from technology.
Australia is home to one of the largest increases in data center and AI-related infrastructure in the developed world. The 350-hectare country’s largest data center is planned for Melbourne’s west by Syncline Energy.
Analysis by Westpac shows there is a pipeline for projects worth $155 billion.
Westpac senior economist Pat Bustamante said demand for data was growing exponentially as artificial intelligence and other emerging technologies were adopted by households and businesses.
He argued that the pipeline of new data centers is unprecedented and will have significant impacts on economic growth and employment.
“Coupled with the potential renewable energy pipeline accounting for approximately $200 billion of actual and potential projects, it is clear that Australia is in the midst of a period of structural change in terms of capital deepening,” he said.
“Once data centers are in place to facilitate widespread adoption of artificial intelligence and emerging technologies, we will see the real benefits of productivity growth. Economic impacts at the production stage will be the focus of the next note.”
Separate research by NAB senior economists Sally Auld and Taylor Nugent showed clear underperformance among the occupations most at risk from AI.
They found that occupations most exposed to AI had total employment and working hours 9 percent lower than jobs not threatened by AI since 2022.
For every 10 percent of a person’s job that could be replaced by existing AI, employment growth was 2 percent slower than for those away from the technology.
About 15 percent of all jobs have high or significant exposure to AI, Auld and Nugent said.
“Our analysis shows that the impact of AI is now clearly visible in labor market data in Australia,” they said.
“As the adoption of AI expands, there are likely to be different cross-currents affecting the labor market. Some jobs will be lost, new jobs will be created, and many will be augmented by AI. Additionally, stronger productivity growth, if it occurs, will increase real wages and aggregate demand.”
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Shane Wright is senior economic correspondent for The Sydney Morning Herald and The Age.Connect with: X or email.
