Australia should embrace automation but be aware of downsides

Experts at a McKinsey event in Sydney called for Australian enterprises to automate while acknowledging the need to reskill workers whose jobs could be displaced

Australian enterprises should embrace automation and artificial intelligence (AI) much faster or risk missing out on a trillion-dollar opportunity.

Analysis by management consultancy McKinsey suggests that enterprises which automate could see productivity improvements of up to 150% by 2030, potentially adding A$4tn to the economy over the next 15 years.

Charlie Taylor, senior partner at McKinsey and a co-author of the report, said although automation has been undertaken by industry for decades, what is different this time round is that existing technologies can now automate 50% of the tasks being undertaken today.

“The proportion of tasks is much greater than what we saw last century, when it was 10 to 20%,” he said.

While there are financial benefits from automation, and the promise of higher wages for those people still in a job, the risk is that more people – particularly blue-collar workers – will be displaced from their jobs. And without rapid reskilling, many will find it hard to find another.

Attila Brungs, vice-chancellor of the University of Technology Sydney (UTS), noted that without a concerted effort to support displaced workers, unemployment could spike by 2.5%, and income inequality widen by 30%.

Taylor and Brungs were part of a panel discussion exploring Australia’s automation opportunity held recently at UTS.

A key issue discussed by the panelists was the need to urgently reskill workers. McKinsey forecasts that automation and AI could displace 3.5 to 6.5 million full time equivalent positions across Australia over the next decade and a half. The impact is expected to be felt most profoundly in the regions.

The disruption by industry ranges from 16% of jobs in education to 33% of jobs in transport, according to McKinsey.

“Up in the Pilbara we see a higher proportion of jobs going because of automation in the mining sector, in agriculture,” Taylor said.

“There is a case for thinking about the role government can play in helping that transition – it’s not an easy one, as there are lots of examples of failed regional support programmes,” he added, calling for job mobility programmes to be more targeted at individuals.

McKinsey’s research suggests that as many as five million Australians may need to switch occupations by 2030 because of the impact of automation. Technical skills will be particularly prized, with workers expected to spend 60% more time using technology-related skills, according to the survey.

Read more about AI and automation in Australia

  • Anglo-Australian mining giant Rio Tinto has carried 28,000 tonnes of iron ore from its mining sites in Tom Price to the port of Cape Lambert in Pilbara, Western Australia, using an autonomous train.
  • As the enthusiasm for artificial intelligence (AI) gathers pace in Australia, the country’s chief scientist has sounded a note of caution and called for more regulation of AI.
  • Australia needs to catch up with other nations that are investing more in innovation and emerging technologies such as AI, or be left behind.
  • Choose the parts of AI to deploy to demonstrate return-on-investment and differentiate your brand, says Volkswagen Australia’s chief customer officer.

John Podesta, special advisor to former US president Barack Obama and chair of Hillary Clinton’s 2016 presidential campaign, was a member of the panel and sounded a note of caution about the race to automate.

“We need to understand the downside in these technologies,” Podesta said. “There are some issues that have not been debated, such as the capacity of algorithms that are non-transparent and result in discriminatory decision-making.”

He warned enterprise to be careful of “applying algorithms that are not transparent against data that is biased”.

Acknowledging that automation could be extremely disruptive and lead to growing social inequality in Australia, Podesta said government could benefit through improved productivity and delivery of services to citizens.

Read more on Artificial intelligence, automation and robotics

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