AI to deliver economic gains and growing pains, RBA predicts

Like many broad technological shifts before it, RBA governor Michele Bullock said that the AI transformation had the potential to reshape the nature of work.

“This transformation is not just about profits – it is part of a much larger societal shift. Technological change has always reshaped the labour market, and AI is no exception,” Bullock said.

“As AI continues to reshape industries and economies, it is not just the tools and processes that are evolving – it is the very nature of work. While many experts anticipate a net increase in jobs, it is likely to be more nuanced: some roles will be redefined, others might be displaced, and entirely new ones will be created.”

Policymakers and firms are hopeful that AI will produce sweeping economic benefits and boost productivity. Generative AI alone could contribute from $45 to $115 billion annually to the Australian economy by 2030, government research found.

The proportion of firms investing in technology is expected to surge over the next few years, Bullock said. While 30 per cent invested in AI over the last five years, a whopping 80 per cent expected to invest in AI in the coming three years, a RBA survey found.

Businesses largely expected to use AI tools to augment labour and automate menial tasks, a shift which could reduce demand for lower-skilled workers.

“Firms mainly expect these tools to augment labour, automating repetitive tasks and redesigning the composition of roles,” Bullock said.

“Lower skilled roles may decline, while demand for higher skilled roles is expected to grow, continuing (and perhaps even fast-tracking) a decades-long trend away from routine manual work.”

Bullock added that AI could possibly automate some higher skilled tasks eventually, but firms said it was currently too early to understand what this would mean for their workforce over the longer term.

A report by Goldman Sachs noted that AI could generate ‘frictional unemployment’ as workers’ skills become mismatched to the demands of the labour market, but predicted that it was unlikely that AI capabilities would advance to the point that human input was redundant.

In the US, there were already anecdotal signs that recent technology graduates were struggling to land roles as generative AI usage picked up, the report said.

Accountants and auditors also faced a high risk of displacement, the report noted. Firms have expressed that AI uptake could lead to a shift from menial tasks to more advisory work, changing the nature of accounting roles.

Some professions are also hopeful that AI could be used to unlock new capabilities. For example, audit professionals have said that AI could make ‘full audits’ more scalable and efficient due to AI’s ability to process large volumes of information.

Across the economy, Bullock noted that firms were investing more into new tools and technology, but not all investments were expected to yield immediate returns.

“We also heard from firms that significant spending on cyber resilience, system upgrades and compliance-related technologies, while essential, have added to operational costs and may continue to boost headcount without a corresponding rise in revenue, especially in the short term,” Bullock noted.

While AI had the capacity to boost productivity across the workforce, businesses noted that AI alone would not solve Australia’s productivity issues. Bullock said that organisational culture and training would be just as important as technology in driving productivity growth.

“Firms told us that they are hopeful that further investment in technological developments will drive an improvement in labour productivity growth,” she said.

“Yet, they also recognise that technology alone will not be a panacea. Gains will depend on complementary changes in skills, workflows and organisational culture.”