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I suspect we “ain’t seen nothing yet”!.
AI is starting to work. The Trump drama could look like a sideshow
Lost among the Trump turmoil is the disruption caused by the AI revolution. It’s happening and Australian investors, politicians and business leaders are not ready.
James Thomson Columnist
May 16, 2025 – 9.53am
For the past few days, some of Australia’s top chief executives – including Commonwealth Bank’s Matt Comyn, NAB’s Andrew Irvine and Telstra’s Vicki Brady – have been bunkered down in the US city of Seattle, for one of Microsoft’s most exclusive and influential events.
The tech giant’s annual CEO summit has an exclusive guest list that includes many leaders from America’s Fortune 500 companies. Comyn, who has spent the last two weeks touring the US, and nerds out on the detail of technology like few other Australian CEOs, says the Microsoft conference has become bigger each year, as the artificial intelligence revolution gathers pace.
“You see the sharp edge of the metaphorical sphere in the US, and how driven and how focused and how intensely they’re working on some of the broader technology challenges,” Comyn tells AFR Weekend.
Comyn, who has done stints in Silicon Valley and at CBA’s Seattle tech hub over the past two weeks on his US tour, has already taken away some key AI lessons from his trip. He says the past six months have seen tremendous advances in what’s called reinforcement learning, where AI mimics the trial-and-error learning process that humans use to achieve their goals. He’s also been closely studying the cultural and leadership aspects of AI implementation.
“There’s a big difference between big companies that are navigating that transition well and successfully, which is not necessarily easy,” Comyn says.
But his biggest message is that the AI revolution is moving faster than ever – and Australia may not be ready.
For many consumers, it may seem that the initial hype that accompanied the release of ChatGPT has faded, and generative AI models are simply better versions of existing tools – a smarter way to search the web, for example, or a souped virtual assistant.
But inside some of the world’s big businesses, things are changing, and fast.
“I think there are interesting questions about how and where that evolves, and how well equipped Australia is,” Comyn says. “The disruptive potential over a three- to five-year timeframe is significant, and there’s a lot of preparatory work and policy work and thought that needs to go into that, at an economy and policy and regulatory level.”
There’s been plenty of discussion about issues such as the infrastructure Australia needs to ride the AI wave, and what regulatory guidelines should steer the development of the sector. But if AI delivers on its promise – that is, if it can augment and replace human workers as tech giants like Microsoft expect – then much more complex and difficult questions will need to be addressed, including around vexed issues like welfare and taxation.
The disruption unleashed by AI could even make the febrile debate around Labor’s proposed tax on unrealised gains for savers with more than $3 million in superannuation look like a sideshow.
One of the most notable aspects of the powerful sharemarket rally that has greeted the cooling of US President Donald Trump’s trade war is the resurgence of America’s tech giants. Having led a two-year rally on Wall Street, the likes of Amazon, Microsoft, Meta Platforms and chipmaker Nvidia were hit first by the emergence of Chinese AI start-up DeepSeek, and then by Trump’s tariff war.
But it’s been a very different story this week. The pause in the tariff war between the US and China sent tech stocks surging, before Trump’s visit to Saudi Arabia, and the promise of huge spending by the Saudi Kingdom on AI infrastructure, added further momentum to the melt-up. Since the start of this week, Nvidia stock has surged 16 per cent, taking its gains since Wall Street bottomed on April 8 to more than 40 per cent.
But the evidence that AI is starting to change the global economy goes well beyond financial markets.
“AI is coming for your jobs. Heck, it’s coming for my job too. This is a wake-up call.”
— Fiverr, chief executive Micha Kaufman
Earlier this week tech giant Microsoft announced it would cut 3 per cent of its workforce – about 6000 workers – in what has been described as a “delayering” exercise designed to remove management levels.
But according to data uncovered by Bloomberg, about 40 per cent of the 2000 staff laid off in Microsoft’s home state of Washington were software engineers. That’s not surprising; last month, Microsoft chief executive Satya Nadella said that about 30 per cent of the code written inside the company was being written by AI.
Presumably, Microsoft’s own popular AI coding tool, called GitHub CoPilot, is doing a lot of the heavy lifting inside the tech giant – and doing the company’s own staff out of work.
The Microsoft sackings were a concrete example of a shift in mood that appears to be taking place across the US business community.
An article in The Wall Street Journal this week suggested that the war for talent has become a war on talent, with CEOs telling staff they need to work harder and stop complaining.
The paper recalled JPMorgan chief executive Jamie Dimon’s now-infamous leaked tirade against remote work from an internal meeting heard earlier this year – “I’ve had it with this kind of stuff. I’ve been working seven days a week since COVID, and I come in, and where is everybody else?” – and a brutal comment from Emma Grede, co-founder of Kim Kardashian’s shapewear company Skims and chief executive of clothing label Good American, co-founded by Khloe Kardashian.
“Work-life balance is your problem. It isn’t the employers’ responsibility,” she said on a podcast this month.
What’s led to this change in tone? At least in part, the Journal argued, a reflection of the advances in AI.
A changing workforce
At Shopify, the $225 billion e-commerce giant, chief executive Tobi Lütke recently wrote a company-wide memo instructing the managers not to hire new staff before making sure their roles could not be replicated by AI.
“Before asking for more headcount and resources, teams must demonstrate why they cannot get what they want done using AI,” he wrote. “What would this area look like if autonomous AI agents were already part of the team?”
At Salesforce, chief executive Marc Benioff has said the company will reduce its hiring of engineers this year due to the use of AI.
At US freelance marketplace Fiverr, chief executive Micha Kaufman shared on social media a memo sent to staff last month warning them that unless they become “an exceptional talent at what you do … you will face the need for a career change in a matter of months”.
“It does not matter if you are programmer, designer, product manager, data scientist, lawyer, customer support rep, salesperson or finance person – AI is coming for you,” Kaufman wrote. “AI is coming for your jobs. Heck, it’s coming for my job too. This is a wake-up call.”
All of this is, of course, anecdotal evidence, and it’s easy to get gloomy about the potential for AI to wipe out large numbers of jobs.
Raphael Arndt, chief executive of the Future Fund, points out that unemployment is hovering near historical lows right around the world, and AI can play an important role in meeting worker shortages in areas like healthcare, where humanoid robots could eventually prove invaluable in meeting the needs of an ageing population.
“We’ve been thinking about lower-cost workforce options for decades.”
— Craig Scroggie, chief executive NextDC
The chief executive of $28 billion ASX-listed accounting software giant Xero, tech veteran Sukhinder Singh Cassidy, is a believer in the disruptive power of AI. “It’s not the future – it’s here now,” she said on Thursday, after delivering another impressive earnings result.
But adoption can be slower than expected; when Singh Cassidy was an executive at Google, she remembers being told by co-founder Eric Schmidt back in 2003 that cloud computing would take over the world. More than two decades later, she says Xero is still working hard to bring customers into the cloud.
But Craig Scroggie, chief executive of ASX-listed data centre operator NextDC says the trend is clear – companies always find ways to cut costs and maximise profits.
“We’ve been thinking about lower-cost workforce options for decades. We’ve outsourced to lower-cost countries for decades, but now we have a tech-based knowledge base with the ability to put a workforce’s entire knowledge base in one system,” Scroggie said at the Macquarie Australia conference last week.
Like it or not, he’s right. The sheer weight of money being ploughed into generative AI around the world – estimated at just over $1 trillion by market research firm Gartner – will demand a return.
Bank of America strategist Michael Hartnett says there are two ways this can go: either companies adopt AI without laying workers off, which will lead to pressure on profit margins and share prices, or AI adoption unleashes a productivity-enhancing wave of unemployment.
In the latter scenario, Hartnett argues, “US politicians would move to protect US workers via wealth taxation.”
Protecting jobs
It wouldn’t just be America facing the question of how to protect citizens forced out of the labour force by artificial intelligence. If Comyn’s prediction is correct, and AI disruption arrives in three to five years, the potential erosion of the tax base from AI-related job losses could be impressive; even if 10 per cent of Australian jobs were hit by the technology, that would mean about 1.4 million extra people out of work.
Sound crazy? Remember, Microsoft has already cut 3 per cent of its workforce, and it’s at the very start of this journey.
But it’s also important to note these job losses would also collide with a nasty shift in demographics; about 80,000 Baby Boomers will turn 80 in 2027, with the number of new octogenarians each year hovering at about 60,000 for the next 20 years, according to modelling by the Australian Bureau of Statistics.
This combination means the oft-repeated suggestions that Labor’s tax on unrealised super gains in super funds with over $3 million will eventually morph into other wealth taxes – higher capital gains taxes or even inheritance taxes – may well prove prescient.
But the pressure to tax wealth would be bipartisan; as Bank of America’s Hartnett says, the combination of fewer individual taxpayers and the costs associated with an ageing population may mean there are few alternatives.
In a world filled as it currently is with uncertainty, it’s hard for workers, investors, politicians and business leaders to grapple with the risks and opportunities AI will bring; the hype has been overdone, the impacts on our daily lives are currently pretty minor, and it’s hard to shake the feeling of helplessness – AI will happen to Australia, and there’s not much we can do about it.
But if nothing else, it’s important to realise the potential scale of the disruption could make today’s big issues – trade dramas, and tax changes – look very irrelevant, very quickly.
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I have to say it is becoming ever harder to know where all this is heading but the curse suggesting “may you live in interesting times” seems to become more of a worry by the week!
It certainly seems that the pace of change is accelerating and keeping up is getting harder and harder.
It is also clear that the impact of this change is going to be wider and deeper that most suspected.
My only advice is to “buckle in, it is going to be a wild ride”!
David.