You know things are perilous when News Australia delivers a full news article on a progressive economist warning of the dangers of AI. Compelling and alarming reading.
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 said 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 Australia’s politicians had been towards the AI industry.
“I’ve never seen a political response as welcoming as this, and so much so that we’ve got an industry that’s promising to cause mass unemployment, not denying it’s going to drive up the price of electricity, and some in its ranks are suggesting there’s a 10 per cent chance the industry could actually lead to the end of humanity,” He told news.com.au.
“And 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 we’re hearing is not caution, but FOMO, the fear of missing out.”
In his testimony, he cautioned MPs and senators that mass joblessness isn’t just a side-effect of generative AI, but that it is the ultimate goal the multi-trillion-dollar industry is driving towards.
“Unlike any technology we’ve ever dealt with, the business model of AI is to generate mass unemployment,” Dr Denniss said. “That is not an unintended consequence, it is the business model.”
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.
“As an economist, I understand productivity. People lose jobs when technology changes,” 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.”
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?
“Where’s the money coming from? It comes from not paying workers,” Dr Denniss said. “The 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.”
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.
“What 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?”
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.
“What will the impact of the AI rollout be on electricity prices, water prices, construction costs, and what will it add to inflation?”
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.
Aussie data centre operator NextDC’s 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 Melbourne’s 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 “fear of missing out” (FOMO) is being weaponised across Canberra to shut down legitimate debate.
“In my lifetime, I have never heard so much hype about a particular industry, and I’ve never heard FOMO — the fear of missing out — being used so aggressively to suggest we can’t talk about things before they happen,” 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 don’t say yes to everything now, we will miss out is, I would suggest, unprecedented,” he said.
“Do we have agency? Of course. Do other countries share our concerns? Of course.”
Dr Denniss also warned that the unchecked spread of AI poses an existential threat to democratic institutions, pointing to deepfakes targeting elections.
“We are going to have elections where fake depictions of real people pretending to say things they’ve never said before are going to dominate our analysis of what’s happening in an election,” he told the committee. “That’s a national security risk, I put to you.”
He also took a swipe at tech leaders who speculate about catastrophic scenarios while pushing their products on governments.
“It’s the AI industry saying, ‘Oh, there’s a 10 per cent chance we might end humanity.’ If I came in here and said that, people would suggest I’m being hysterical. I have no idea — maybe it’s only a 5 per cent chance.”
Dr Denniss urged the committee to stop viewing the technology solely through the lens of tech developers and start protecting the public interest.
“At the moment, most of the people talking… are people who are really interested in the tech,” he concluded. “Well, I’m really interested in the macroeconomic consequences. I’m really interested in the democratic consequences.”
He said the green energy transition faced far more scrutiny than AI.
“So for decades we’ve been told we shouldn’t 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,” he said.
“But when it comes to AI, we’ve been promised it will lead to large job losses and we’ve 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.
“Well, a lot of people understandably just aren’t buying that.
“Not only don’t 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.
“I’m not an expert in AI, but I know that that’s 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 doesn’t seem like a very compelling proposition to normal people.”
The stark warning over Canberra’s AI blind spot comes as veteran journalist Kerry O’Brien delivered a scathing appraisal of Anthony Albanese’s leadership, warning the Prime Minister is sleepwalking into the AI crisis.
“It’s a book of disappointment by a lot of people who voted for him,” O’Brien said.
While O’Brien acknowledged having “some sympathy” for the government wrestling with the 50-year legacy of “neoliberalism”, he warned that Mr Albanese’s 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 “train or tsunami”.
“The worst of it is the politicians, including Anthony Albanese, appearing to me they’re hoping to pretend and get away with… pretend that they’re on top of it, and they are not,” O’Brien said.
“No government is on top of it, even those that have already tried to regulate.”
O’Brien claimed the Prime Minister’s slow-and-steady approach is leaving Australia utterly unprepared for the fallout, saying a book about the PM’s legacy would be one of “disappointment”.
He said the government had a “lack of courage, the lack of imagination, the lack of creativity of policy”.