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Australians are yet to see the benefits of AI and datacentres – and US midterms show they could be political kryptonite
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Australia’s AI and datacentre boom has yet to deliver visible benefits, while the Reserve Bank warns it is already adding to inflation. This week, the RBA lifted interest rates to an 18-year high, citing stronger-than-expected investment, including datacentre projects. Governor Michele Bullock said “some pain now will prevent even worse pain” later.
Bullock placed datacentre-related demand alongside oil prices, weak productivity and prolonged inflation. The RBA’s monetary policy statement said AI-related investment was driving rapid growth in technology goods prices. Asked when AI might lower inflation, Bullock replied: “Your guess is as good as mine.”
Deloitte Access Economics reported Australia’s $1.39tn investment pipeline includes 37 datacentres worth $141bn, up 36% in a year. Director Sheraan Underwood said the boom is competing with housing and infrastructure for workers and materials. Deloitte warned construction demand and inflation pressures are arriving now, while the productivity dividend may come much later.
The political risk is rising. US midterm results show datacentres are becoming political kryptonite for voters skeptical of the AI boom. That suggests the Albanese government should tread carefully as it prepares a plan to attract AI investment.
For Australia, the debate involves copyright changes that could hurt creatives, special rules on power and water use, and fears of mass worker displacement. Yet the positive benefits remain uncertain. The RBA even cautioned that productivity gains might raise the neutral interest rate rather than keep rates low.
Deloitte said the technology fit-out is largely imported and few workers staff the facilities, limiting direct economic payoff. Construction gains may be substantial but not broad productivity gains. Shadow energy minister Dan Tehan criticized a home-battery program’s cost blowing out from $2.3bn to $8.5bn. The government must better explain benefits and consider measures beyond RBA rate rises.
