Australia's March quarter GDP grew by 0.3%, but the underlying drivers raise serious concerns about the climate and employment, according to economist Greg Jericho.
Datacentre Investment Booms
The main contributor to economic growth was private investment in machinery and equipment, particularly in the information technology and communications industry, which includes datacentres. This surge was so significant that without it, non-mining investment would have declined.
Climate Risks Amplified
The Climate Council warns that datacentres could increase their share of national electricity use from 2% to 6% by 2030 and 12% by 2050, undermining efforts to reduce emissions. Greg Jericho notes, 'We either will need to massively increase our use of renewables and batteries or datacentres will effectively destroy our ability to reduce emissions to net zero.'
Job Creation Minimal
Despite the investment boom, datacentres create few jobs. The focus on machinery and equipment, rather than construction, means employment gains are limited. 'Anyone waiting for a jobs boom from actually running the datacentres will be waiting a very long time,' Jericho writes.
Household Spending and Profits
Household spending rose, but half of the increase came from higher electricity and gas bills after government rebates ended. Real per capita household disposable income fell 0.7%, partly due to rising interest rates. Profits fell overall, but non-mining sector profits actually rose.
Questioning GDP's Relevance
Jericho argues that GDP growth driven by datacentres and energy spending does not reflect true economic well-being. 'If you’re starting to think GDP might not really capture what matters in life, you very much are not mistaken,' he concludes.
