Speaking with Commonwealth Bank of Australia (CBA) chief economist Luke Yeaman, Productivity Commission chair Danielle Wood attributed the flatline to structural economic changes, weak business investment, poor technological adoption rates, and a shift to labour-intensive services.
“Investment just hasn’t really recovered anywhere post-GFC … that means less technology, less capital per worker,” Wood said, adding that lower business enthusiasm had also impacted productivity.
“If you’ve got fewer people switching jobs, fewer new businesses … fewer disruptions in markets … [productivity] tends to be lower.”
However, Wood said the low levels of productivity could be alleviated, in a large part thanks to AI. The technology could provide a notable boost, depending on how well it is adopted and implemented within the Australian economy.
Wood said Australia is behind in adoption compared to the US, the UK, and Canada and that the productivity gains the technology delivers depend entirely on how businesses adopt AI in their operations.
“Our estimate … was that AI could add 4 per cent to labour productivity over the decade,” Wood said. “It is meaningful and … not much else is going to give you something of that magnitude.”
“The benefits obviously only come once you adopt it … but it’s also about moving past the shallow adoption of AI, from using it to write better emails, take meeting minutes, to using it for the fundamental reconfiguration of businesses, processes and products.”
In Australia, the banking industry has already invested heavily and adopted AI technology, with CBA planning to or having already used it for financial advice, customer service, and more, to varying degrees of success.
However, the bank’s CEO, Matt Comyn, said businesses worldwide might begin tightening their belts on AI spending as early as this year, as the technology becomes more expensive and caters to more business outcomes.
Comyn said companies using AI will be more pressured to see a return on AI investment, particularly as data centre costs and workforce disruption place greater constraints on AI rollouts.
As a result, corporate AI tokens have increased in price, alongside the fact that these tools have greater “reasoning, the access to tools, the amount of context that you can put into it – your token costs do not scale on a linear basis”, he said, speaking at The Australian Financial Review conference.
“I won’t be surprised if over the course of this year, companies will be really scrutinising [the cost of AI],” Comyn said.
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