The Albanese government is grappling with a sluggish economy and declining real wages, turning to artificial intelligence as a potential driver of productivity growth, but facing significant risks and regulatory challenges.
Economic Woes Persist
Recent data paints a bleak picture. The OECD found Australia among 11 developed countries where real minimum wages fell between April 2025 and April 2026. Deloitte Access Economics cut its growth forecast for 2026–27, warning the economy would "limp along at less than 2.0% annual growth for the next two years." The IMF projects GDP growth of 1.9% in 2026 and 1.7% in 2027. On a per capita basis, GDP went backwards in two of the past five quarters, with consumer confidence low.
Government's Response: Focus on AI
To revive productivity, the government is looking to AI. New data centres are boosting business investment, and Australia is attractive for international investment due to its land, water, technology uptake, and stable legal systems. However, AI also brings concerns about energy and water consumption, noise, and community opposition.
Internal Tensions on AI Policy
Within the ministry, views differ. Former industry minister Ed Husic favoured overarching legislation, but the government opted for a decentralised approach, with ministers and regulators handling AI in their areas. Assistant Minister Andrew Charlton, a strong AI advocate, emphasises strict conditions for social licence. Industry Minister Tim Ayres, from the union movement, insists unions be "at the top table." Employment Minister Amanda Rishworth released a report on "AI and Employment in Australia," finding no broad labour market upheaval yet, but noting that occupations most exposed to AI grew more slowly (5.6% from November 2022 to February 2026) compared to least-exposed (9.5%).
Regulatory Framework and Industry Concerns
The government's National AI Plan, released in December, was seen as "light touch" regulation, including an AI Safety Institute and data centre requirements. Arts Minister Tony Burke, dubbed the "shop steward" for musicians, is concerned about copyright issues. Attorney-General Michelle Rowland oversees copyright, with the government believing existing law is robust but ready to act if needed.
Prime Minister's Upcoming Speech
Next week, Anthony Albanese will deliver a speech on AI, expected to outline a broad vision rather than detailed policies, signalling the government's effort to balance AI's potential with its risks.
