AI not delivering productivity gains, only job losses: RBA assistant governor

The assistant governor of the Reserve Bank of Australia has said that artificial intelligence has not delivered on its productivity promises and suggested that it may have done more harm than good.

During a recent talk at a UBS conference in Sydney, Reserve Bank of Australia (RBA) assistant governor Sarah Hunter said the initial impact of AI investment and infrastructure has bolstered demand, which served to build upon existing price pressures on an already strained economy.

However, she also said that as data centres are built, the supply and demand will equalise, easing current constraints.

“Over time, supply will catch ​up with demand as data centre capacity and related sectors expand, ​easing current bottlenecks,” she said.

“If AI delivers broader productivity gains, economies will be able to produce more with the same inputs. As a result, the ​initial inflationary pressures from AI investment are likely to dissipate.”

In its latest Monetary Policy Board cash rate call, the RBA said that investment in AI is driving the price of technology products up, which in turn is driving inflation.

“AI-related investment is driving rapid growth in prices for technology-related goods, and inflation in many goods and services remains high,” the RBA said last week.

However, while AI seems to be dominating virtually all industries in terms of investment areas, Hunter said there is little to suggest that the outcomes it’s generating are actually beneficial, noting that employment has been affected and that productivity has not clearly increased.

“There are tentative signs of adjustment, through weaker ​job ad posting and employment outcomes in more AI-exposed ​occupations, ⁠and stronger growth in areas where the technology has had less of an impact, particularly for younger workers.”

The big four banks have all axed large numbers of staff, with NAB only last month announcing a cut of 2,500 people by midway through 2027. All of these organisations are also investing heavily in AI. To return to the example of NAB, the bank just announced the rollout of its new staff AI platform, “Ruby”.

Hunter also warned of an AI bubble burst. With heavy investment in the technology and less diversified investment portfolios, a crash in the AI market could be detrimental.

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