AI Spies a Better Economy: Productivity Commission urges Australian Government to consider productivity benefits of AI -

Commentary by Marie Khoury

With productivity at a 60-year low, the Australian Government in 2023 tasked the Productivity Commission with identifying the highest priority reform areas which have the potential to materially boost Australia’s productivity growth.

On Tuesday 5 August, the Productivity Commission released an interim report entitled ‘Harnessing data and digital technology’ (‘Report’). 

You can access the full Report here: https://lnkd.in/gnuwrsaU 

The Report has estimated that AI could increase multifactor productivity by about 4.3% over the next decade. This is because unlike computerisation, which includes mostly automated routine cognitive tasks like data entry or typewriting, AI appears to be replacing non-routine cognitive tasks. Automation therefore has the potential increase incomes, leisure time, and living standards when machines perform tasks faster or better than human labour. 

To this end, the Productivity Commission has urged the Australian Government to pause steps to implement the contemplated "mandatory guardrails" for high-risk AI, which could “stifle innovation”. Instead, the Government was called to review the current laws for any “gaps” that could be filled. Recommendations for such a review included: 

• how AI is being used or is likely to be used in the near future, and whether these uses increase the risk of serious harm compared to what would occur in its absence;

• which parties involved have the scope to influence risks and outcomes; and 

• whether the risk is adequately addressed by an existing regulation or whether extensions or modifications to this regulation, or improvements to its enforcement, are required.

The Productivity Commission also considered in its Report that the Australian Government has a number of policy responsibilities that will be important in making the most of the AI opportunity. These include, amongst other things:

• Using regulation sensibly to build community trust and business confidence;

• Acting as an exemplar in the use of AI;

• Building foundational capabilities to support AI uptake;

• Investing in digital infrastructure, noting that many AI models will not be hosted locally and high-speed internet is a prerequisite to fully utilising AI. 

The Report stated AI-specific regulation should only be considered as a "last resort". 

This could then allow the technology to generate more than $116 billion for the nation's economic activity over the next 10 years and promote a $4300 real wage boost for the average Australian.

AI adoption across the economy could, however, create "painful transitions" for workers who would be made redundant, the commission added. 

What are your thoughts on the Productivity Commission’s stance?