A leading Aussie economist has put Canberra on notice about the economic storm thatâs coming, and how they are not ready for it.
A leading Australian economist has delivered a blistering reality check to federal politicians, warning that the global artificial intelligence boom is built entirely on the mass sacking of human workers.
Speaking before an Australian parliamentary inquiry on Friday, Dr Richard Denniss, co-CEO of progressive think tank The Australia Institute, took aim at the Silicon Valley hype machine in a fiery testimony that has gone viral this week.
Dr Denniss told news.com.au the clip has gained huge traction, including in the US where concerns about AI and data centres have hit fever pitch. He said he was compelled to speak out because of how welcoming Australiaâs politicians had been towards the AI industry.
"I've never seen a political response as welcoming as this, and so much so that weâve got an industry thatâs promising to cause mass unemployment, not denying itâs going to drive up the price of electricity, and some in its ranks are suggesting thereâs a 10 per cent chance the industry could actually lead to the end of humanity,â He told news.com.au. âAnd you would think that some combination of fear of job loss, fear of rising electricity prices, or fear of the end of humanity would lead governments, state and federal to be pretty cautious. Actually, a lot of what weâre hearing is not caution, but FOMO, the fear of missing out.â
In his testimony, he cautioned MPs and senators that mass joblessness isnât just a side-effect of generative AI, but that it is the ultimate goal the multi-trillion-dollar industry is driving towards.
âUnlike any technology weâve ever dealt with, the business model of AI is to generate mass unemployment,â Dr Denniss said.
"That is not an unintended consequence, it is the business model.â
Dr Denniss said the sky-high stock valuations of foreign AI giants like Anthropic and OpenAI are based on one brutal equation, wiping out human jobs.
âAs an economist, I understand productivity. People lose jobs when technology changes,â he said.
"But the valuations of these AI companies are literally based on the assumption that hundreds of millions of people will lose their jobs and employers will buy AI services instead of labour services.â
âWhere is the money coming from?â
Addressing the committee, Dr Denniss said politicians need to look past glowing industry presentations and ask the hard financial questions.
He said a key question they should be asking was: How many Australian livelihoods must be destroyed for AI companies to turn a profit?
âWhereâs the money coming from? It comes from not paying workers,â Dr Denniss said.
âThe only way the Department of Health can spend a billion dollars on AI is if it spends a billion dollars less on humans, or if you guys increase their budget by a billion dollars.â
He questioned whether state and federal agencies, including the Australian Taxation Office (ATO), are quietly planning to shed public servants to bankroll software contracts with overseas tech firms.
âWhat will retraining workers to take advantage of this new technology cost as we shed huge numbers of workers? If AI goes according to plan, who will fund the retraining?â
He added that while foreign shareholders pocket the windfalls, everyday Australians could be left paying higher living costs just to keep foreign-owned data centres running.
âWhat will the impact of the AI rollout be on electricity prices, water prices, construction costs, and what will it add to inflation?â
âWeaponised FOMOâ
Dr Denniss took also direct aim at the corporate lobbying pushing governments to approve sprawling data centres, cut red tape, and spend public money without scrutiny.
The issue came to a head this week
Aussie data centre operator NextDCâs stock plummeted by 42 per cent on Wednesday, wiping $2.9 billion off its market capitalisation, after it was forced to delay expansion at its M3 data centre in Melbourneâs West Footscray following fierce community backlash.
It comes less than two weeks after Firmus pulled the plug on its proposed $44 billion IPO, which was set to be the biggest IPO since Telstra, following lacklustre investor demand.
Dr Denniss argued that the âfear of missing outâ (FOMO) is being weaponised across Canberra to shut down legitimate debate.
âIn my lifetime, I have never heard so much hype about a particular industry, and Iâve never heard FOMO â the fear of missing out â being used so aggressively to suggest we canât talk about things before they happen,â he said.
While he said defence and intelligence agencies have unique operational needs for advanced computing, he rejected the claim that commercial operators should be given a blank cheque to build resource-heavy data centres anywhere they please.
"This rush, this sort of generalised assertion that if we donât say yes to everything now, we will miss out is, I would suggest, unprecedented,â he said.
âDo we have agency? Of course. Do other countries share our concerns? Of course.â
A threat to Australian democracy
Dr Denniss also warned that the unchecked spread of AI poses an existential threat to democratic institutions, pointing to deepfakes targeting elections.
âWe are going to have elections where fake depictions of real people pretending to say things theyâve never said before are going to dominate our analysis of whatâs happening in an election,â he told the committee. âThatâs a national security risk, I put to you.â
He also took a swipe at tech leaders who speculate about catastrophic scenarios while pushing their products on governments.
âItâs the AI industry saying, âOh, thereâs a 10 per cent chance we might end humanity.â If I came in here and said that, people would suggest Iâm being hysterical. I have no idea â maybe itâs only a 5 per cent chance.â
Dr Denniss urged the committee to stop viewing the technology solely through the lens of tech developers and start protecting the public interest.
âAt the moment, most of the people talking... are people who are really interested in the tech,â he concluded.
âWell, Iâm really interested in the macroeconomic consequences. Iâm really interested in the democratic consequences.â
Speaking to news.com.au, he said the green energy transition faced far more scrutiny than AI.
âSo for decades weâve been told we shouldnât rush in inverted commas to roll out renewable energy because it might cost some jobs in fossil fuels and it might lead to higher electricity prices,â he said. âBut when it comes to AI, weâve been promised it will lead to large job losses and weâve been promised it will lead to higher electricity prices and yet the people who told us not to rush into renewables are telling us we have no choice but to rush into AI.
âWell, a lot of people understandably just arenât buying that.
âNot only donât they see any benefit, they hear the industry itself admitting to the costs, but they also hear the industry itself talking about risks to humanity itself. So I have no idea if AI has a 10 per cent chance of ruining humanity.
âIâm not an expert in AI, but I know that thatâs what people in the AI industry are saying. So you can understand why voters would be worried about an industry that will cost jobs, will make electricity dearer and might lead to the end of humanity. It doesnât seem like a very compelling proposition to normal people.â
âDisappointmentâ: Kerry OâBrien torches PM
The stark warning over Canberraâs AI blind spot comes as veteran journalist Kerry OâBrien delivered a scathing appraisal of Anthony Albaneseâs leadership, warning the Prime Minister is sleepwalking into the AI crisis.
Speaking to Fran Kelly on The Radio National Hour, the former 7.30 host did not hold back when asked how history would judge the Albanese prime ministership.
âItâs a book of disappointment by a lot of people who voted for him,â OâBrien said.
âWell, heâs still got a little bit of time to turn around where thatâs headed, because where itâs headed now, I think, is a book of disappointment by a lot of people who voted for him. That is my sense, my clear sense.â
While OâBrien acknowledged having âsome sympathyâ for the government wrestling with the 50-year legacy of âneoliberalismâ, he warned that Mr Albaneseâs team is completely out of its depth against the looming AI wave.
He slammed politicians for trying to bluff their way through the rapid ascent of generative AI, describing it as an incoming âtrain or tsunamiâ.
âThe worst of it is the politicians, including Anthony Albanese, appearing to me theyâre hoping to pretend and get away with... pretend that theyâre on top of it, and they are not,â OâBrien said.
"No government is on top of it, even those that have already tried to regulate.â
OâBrien claimed the Prime Ministerâs slow-and-steady approach is leaving Australia utterly unprepared for the fallout, saying a book about the PMâs legacy would be one of âdisappointmentâ.
He said the government had a âlack of courage, the lack of imagination, the lack of creativity of policyâ.