To Save Australia's Economy, the Government Must Share AI Gains and Budget Pain

Australia's Prime Minister Anthony Albanese is under pressure to fix the country's economy before the next federal election, due by 2028. Prices are still high, and the Reserve Bank of Australia raised interest rates again this week, making loans and mortgages more expensive. Labor holds 94 of 150 seats in parliament, but support in polls has been sliding. Many voters are frustrated about the rising cost of living.

One big idea the government is looking at is using artificial intelligence — often called AI — to save money and boost productivity. AI is technology that can handle tasks that usually take a lot of human time. For example, New South Wales is already using AI to help planners review large building projects faster. This frees up skilled workers to focus on more complex decisions.

NSW Treasurer Daniel Mookhey called this kind of AI use a 'win-win opportunity.' He said it can improve public services, fill worker shortages, and let employees tackle bigger tasks. But he also said progress works best when 'everybody feels as though they can share in the additional prosperity.' That means the benefits of AI need to be spread fairly — not just kept by governments or big companies.

The federal government wants to introduce AI tools across its workforce, but some unions are resisting. Unions are organizations that protect workers' rights and push for fair pay. They worry AI could shrink the number of jobs or reduce workers' hours and income. The government's challenge is to offer workers better wages in exchange for embracing the new technology.

Australia's budget is also under pressure. The government has tried to cut spending in areas like private health insurance support, veterans' benefits, and aged care services. But rival parties in the Senate have blocked most of these plans. So the government is now hunting for savings it can make without needing a Senate vote.

History offers Labor a helpful example. In the 1980s, the Labor government brought together workers, businesses, and other groups to agree on sharing both the gains and the costs of big economic changes. That deal helped Australia grow its economy for 158 out of 170 three-month periods since 1984 — one of the longest growth streaks in the world. Today's leaders may need a similar creative agreement to move forward.

The same 'gain-sharing' idea should apply to data centers — large buildings full of computer servers that power AI and the internet. Many communities in Australia and the United States are pushing back because data centers use huge amounts of electricity and affect local neighborhoods. The government has started requiring data centers to supply their own power and limit community impacts. But experts say more is needed, like paying nearby landowners the way people are paid when power lines cross their land.

So far, the government hasn't done a strong job of explaining to ordinary Australians why AI is good for them. Its main argument is that Australia will fall behind if it doesn't invest now — but that hasn't calmed fears about job losses. Telling workers that AI will make them ten times more productive raises an obvious question: how much of that extra value do workers actually keep? Without a fair share of the gains, it's hard to convince people to embrace change.

Reform is never simple, because there are always people who lose something in the process. But Labor has succeeded before by making sure the number of winners is larger than the number of losers. If the Albanese government can strike smart deals — with unions, with communities near data centers, and with worried voters — it may be able to repair both the economy and its falling popularity at the same time.