Automation could add $2.2 trillion to Australian economy by 2030 – The Australian Financial Review

Andrew Charlton from AlphaBeta warns automation is a huge productivity shock but "productivity shocks are only valuable it the workers are successfully transitioned".

Automation could add $2.2 trillion to Australia's annual income by 2030, but we risk blowing it because companies invest less in robotics than their offshore competitors, a report commissioned by Google has found.

The AlphaBeta report released on Tuesday found only about 9 per cent of publicly listed companies were engaging in automation, compared to 14 per cent for leading nations and more than 20 per cent in the United States.

Andrew Charlton, co-founder of the economic consultancy firm and a former adviser to prime minister Kevin Rudd, said the low investment rate was acting as a "handbrake" on productivity and if Australian companies accelerated automation investments it could add $1 trillion to economic output over the next 15 years.

"It would be dire for Australia's competitiveness if companies continued with a business-as-usual approach," he said.

"Slowing down the pace of automation, rather than accelerating it may do more harm than good, depriving Australia of the resulting productivity benefits and potentially reducing the global competitiveness of local industries."

There is no official data on automation so AlphaBeta adopted a unique method by identifying firms that increased both capital expenditure and labour productivity by 5 per cent or more between 2010 and 2015.

The report found Australia's automation levels were similar to Sweden but three times lower than Switzerland, where more than 25 per cent of publicly listed firms appear heavily engaged in automation.

"How it shook out was a large part of Australia's automation is in the mining sector, but we actually lag in manufacturing, most parts of services, retail and wholesale trade," Mr Charlton told The Australian Financial Review.

Miners BHP Billiton and Rio Tinto were Australia's most automated listed companies by AlphaBeta measure, the latter's fleet of 69 fully automated trucks in the Pilbara making it the world's largest owner and operator of autonomous haulage systems.

Mr Charlton said Australia's overall low rate of automation could be explained by factors such as scale and direct competitive pressures.

"Embracing automation can require a large capex investment and a lot of firms in Australia seem to be a lot smaller than European and US firms," he said.

"So the ability to make a bit of up-front investment in artificial intelligence is potentially lower to the extent there are fixed costs in making that investment."

Applying working hours data to a US breakdown of occupations into tasks, the report found that over the past 15 years Australia had reduced the amount of time spent on physical and routine tasks by two hours a week.

"So, for example, retail workers have spent less time ringing up items and more time helping customers, bank employees less time counting banknotes and more time giving financial advice," it said.

However, if local companies were as committed to automation as their US peers, the report estimated they would save more than four hours a week, boost productivity by 50 per cent and add another $1 trillion to economic output.

Companies would also save money from fewer working days lost to injuries sustained from physical work, which on current automation trends could fall by 11 per cent in 2030.

While the report found automation would mostly involve changes in the way workers did their current jobs, 29 per cent of the change would involve workers changing jobs.

It warned that if companies merely allowed automation to displace workers or reduce work time, productivity would rise but GDP growth would be limited.

But in a scenario where workers "transitioned" to other jobs and reinvested time savings into "uniquely human tasks", the economy would be boosted by $1.2 trillion in value over 15 years.

"This is a huge productivity shock but productivity shocks are only valuable it the workers are successfully transitioned," Mr Charlton said.

He urged policymakers, companies, unions, education providers and workers to focus on teaching students critical future skills, support workers affected by the change and look overseas for international best practice.

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Automation could add $2.2 trillion to Australian economy by 2030 - The Australian Financial Review