Key facts
- AI could make legal advice cheaper but courts more expensive.
- AI adoption may increase workers' compensation claims.
- AI infrastructure development could compete with housing for resources.
- Australian businesses are spending $5-8 billion annually on AI, with most payments flowing offshore.
- Local spending on AI could reach $20-40 billion annually within a decade.
- Commonwealth Bank reported $200 million in gross benefits from AI use cases in FY26.
Artificial Intelligence (AI) is poised to bring about significant economic shifts in Australia, with potential for cost savings in some areas but increased expenses in others, according to submissions to a Joint Select Committee on Artificial Intelligence. While AI could make legal advice cheaper and retailers more efficient, it may also lead to more expensive courts and increased workers' compensation claims. The development of AI infrastructure could also create competition with the residential housing market for essential resources like electricians, electricity, and water.
Businesses are finding it challenging to quantify the return on investment for AI, with many struggling to align the rapidly changing technology with their operational needs. Anna Volkova, head of people and culture at HR software company HiBob, noted that businesses are finding it difficult to judge the value they are getting from AI against its mounting costs, and that it may take two to three years to see a tangible impact on the bottom line. Despite a decrease in the cost of AI tokens, overall spending by businesses on AI is increasing.
Assistant Minister for Technology and the Digital Economy Andrew Charlton highlighted that Australians are already spending $5-8 billion annually on AI, with the majority of these payments flowing offshore, creating a new import bill for intelligence. This figure is projected to rise significantly, potentially reaching $20-40 billion annually within a decade. Commonwealth Bank reported an increase in its technology spend, from $2.3 billion in FY25 to $2.4 billion in the most recent financial year, while also noting gross benefits from AI use cases of approximately $200 million in FY26, with expectations for these benefits to double in FY27 and exceed investment.
Jeremy Pell, from firm Elastic, echoed the sentiment that companies have not yet fully realized the 'bottom-line' benefits of AI cost savings. Stu Scotis, AI leader for Deloitte, observed that IT budget planning is becoming more complex, with long-term IT costs now needing to be weighed against the new, variable expense of AI. He noted that 'tokens,' which represent units of data processed by AI, have become a key focus in conversations about AI costs. While the cost of tokens has decreased due to increased competition, more efficient chips, and greater supply, the overall investment in AI continues to grow.