AI could disrupt 30% of Aussie jobs in 5 years—are we ready?
Welcome to Talking Business, a podcast produced in Melbourne Australia. The podcast is available on the Acast site, my own website, the Apple Podcast store or wherever you go to get your podcasts. Or you can get it at the Business Acumen website at www.businessacumen.biz.
For the most exclusive access to leading economists and business leaders from around the world, subscribe to Talking Business from my website leongettler.com.
I am Leon Gettler. My job is to review and monitor the week’s news in business, finance and economics. I bring it all to you, every week.
This is episode number 46 in our series for 2024 and today’s date is Friday December 13,
First I’ll be talking to Gavin Bessarabie, the co-founder of Confidence Club, a subscription-based service that offers customers a discreet and convenient way to purchase essential incontinence products.
And I’ll be talking to Independent economist Saul Eslake about what to expect in the Australian and global economies in 2025.
But first, let’s talk to Gavin Bessarabie
So what’s happening the news?
Rupert Murdoch has failed in his attempt to change the terms of a family trust that would have consolidated his son Lachlan’s control over a media empire that spans Fox News, The Wall Street Journal, The New York Post, The Australian, The Daily Telegraph and Sky News Australia. A Nevada court ruled resoundingly against Mr Murdoch, 93, rejecting his efforts to preserve his media empire’s conservative editorial position. Mr Murdoch and his lawyers had argued that it would be better for the entire family if Lachlan, now the chairman of News Corporation and the executive chairman of Fox Corporation, oversaw the business. The blockbuster lawsuit had pitted Mr Murdoch and Lachlan against the rest of the family– James Murdoch, Elisabeth Murdoch and Prudence MacLeod. A 96-page court document revealed a scathing ruling from Nevada commissioner Edmund Gorman. Mr Gorman characterised the plan to change the trust as a “carefully crafted charade” to “permanently cement Lachlan Murdoch’s executive roles” inside the empire “regardless of the impacts such control would have over the companies or the beneficiaries” of the family trust.
ANZ has appointed HSBC’s former wealth and personal banking boss Nuno Matos to succeed Shayne Elliott, who is retiring as chief executive after nine years. The Portuguese banker, 57, will start on July 3. He has worked at HSBC for a decade including as chief executive of its bank in Europe and Mexico. Mr Matos announced his resignation from the London-based bank in October. ANZ chairman Paul O’Sullivan said the board assessed several external and internal candidates but turned to Mr Matos given his experience leading business, risk and technology transformations. The succession means three of the country’s four major banks will have appointed new chief executives this year. National Australia Bank appointed Andrew Irvine to succeed Ross McEwan in February and Anthony Miller will become Westpac’s chief executive next week. Mr Matos, an unknown among Australian bankers, said ANZ had a “unique competitive position, with two scale domestic markets [and] a leading institutional banking franchise”. In his most recent role at HSBC, he was responsible for 87,000 employees who served 40 million customers in 35 markets. Before joining HSBC in 2015, he spent 20 years at Santander, a major Spanish bank. Mr Matos, who will move to Melbourne from Hong Kong with his family, will be paid $2.5 million annually, and be eligible for a $2.5 million short-term bonus and a $3.4 million long-term bonus in his first full year at ANZ. Mr Elliott was appointed chief executive in 2016 after four years as chief financial officer and running ANZ’s institutional division. He will remain chief executive until July 2 and continue to provide handover support until September 30. His legacy will likely be defined by two matters. The first was ANZ’s $4.9 billion takeover of Brisbane-based Suncorp’s banking business – the biggest merger in the sector since CBA acquired an ailing Bankwest during the global financial crisis in 2008. The second, however, is a scandal within the bank’s markets division, which is the subject of an Australian Securities and Investments Commission investigation. The regulator is assessing whether traders at the bank had manipulated the pricing of a $14 billion government bond sale, costing taxpayers money but leaving ANZ with outsized profits.
The federal government’s science agency has shot down criticism of its findings that building a nuclear energy industry would be too expensive and slow, in a new report that directly challenges Peter Dutton’s signature energy policy. The Commonwealth Scientific and Industrial Research Organisation’s latest update on the cost of meeting the nation’s future power needs comes as the opposition leader is expected this week to release the long-awaited full costings of his nuclear policy. Mr Dutton’s policy envisages seven nuclear reactors across the country to provide round-the-clock carbon-free electricity, with the first coming online in 2035 or 2037 depending on the type of plant. But the CSIRO’s draft GenCost report for 2024-25, compiled with the Australian Energy Market Operator, found solar and wind power backed up by firming and transmission remains the lowest-cost form of new generation. The first large nuclear reactor could not produce electricity in Australia until 2040 at the earliest and at a cost per unit of generation of between $145 and $238, well above firmed renewables, the report found. Costs for a small modular reactor (SMR) would be even higher – $189-$414 per megawatt-hour – it calculated. If somehow a nuclear plant were installed by 2030, costs would still exceed the $80-$122 per megawatt-hour for wind and solar plus firming and transmission connections, assuming an 80% share of renewables in the mix. Australia has a target for renewable energy to represent 82% of electricity supply by the end of the decade. Up-front capital expenditure was also much higher for nuclear, at $8984 per kilowatt for large-scale nuclear or almost $9 billion for a 1 gigawatt plant. Costs for SMEs for 2024 are $29,667 per kilowatt, falling to $15,000-$17,000 per kilowatt in the 2040s. Offshore wind using turbines were put at $4710 per kilowatt, compared with $3223 per kilowatt for onshore wind and $1463 per kilowatt for large-scale solar. Addressing criticism that it had failed to take into account the longer operational life of reactors in its previous GenCost report, the CSIRO found that a longer life rendered “no unique cost advantage” for nuclear technology. It typically bases its estimates on a 30-year life of plants but now has examined longer periods. It also rejected the argument the 53% to 89% capacity factor it assumes for reactors was too low, and that it should use the 93% that US reactors average.
An onslaught of higher housing payments coupled with more expensive essentials is driving more Australians to find ways to pay down debt and make their money go further as financial stress levels increase. Credit rating agency, Equifax, reports a substantial uplift in financial stress for households, with 39% of Australians surveyed now a victim. This stress is more common among women (41%) and younger Australians, with 42% of millennials and 52% of gen Z reporting increased anxiety about their finances. Cost-of-living pressures are also having a profound impact on personal insolvency figures, with the Australian Financial Security Authority reporting that volumes increased by 6.4% to 3307 in the September quarter, compared to 2023. The 2024 Australian Credit Scorecard released by Equifax shows half of all Australians have cut back on discretionary purchases now compared to 12 months ago – a significant increase from 2022, when only 37% said this. Increased living expenses meant 56% of Australians cook more at home to save on takeaway or restaurant spending. It comes after data from the Australian Bureau of Statistics showed that household spending rose 2.8% in the year to October, down from 4% a year prior. Equifax identified a 9-percentage point decrease to 60% in the level of Australians that remained financially ambitious, while half say paying down debt or moving beyond living pay cycle to pay cycle is their biggest financial priority for the coming year.
Packaging billionaire Anthony Pratt pumped $US10 million ($A15 million) into US President-elect Donald Trump’s campaign, with the late donation landing just days before the start of the presidential election on November 5. The chairman of multinational paper and packaging company Visy and Pratt Industries donated the sum to MAGA Inc – a super PAC (an organisation that raises funds for the purpose of campaign advertising) supporting Trump – joining a host of wealthy donors who boosted the Trump campaign through a late influx of cash. Pratt, who is moving permanently to the US after having received his green card in October, hailed Trump’s return to the White House and reaffirmed his commitment to working with the incoming administration. While the Visy business in Australia is jointly owned by Pratt and his sisters Heloise Pratt and Fiona Geminder, the US-based Pratt Industries is solely owned by Pratt and is the main source of his personal $23 billion fortune. The company is the fifth-largest corrugated packaging company in the United States, one of the largest privately owned producers of 100% recycled containerboard in the world, and operates more than 70 factories. Pratt, a regular visitor to Trump’s Mar-a-Lago resort. in Palm Beach, Florida, has been a very vocal backer of the US president-elect.
Independent investment company Breakthrough Victoria is investing $2 million in Umps Health, a Victorian company developing sensors and AI to enable proactive aged care at home. The Umps Link, a smart home platform, is the product of six years of research and development, and since launching the platform in 2023, the company has grown to support thousands of households across Australia. The technology is easily installed in the homes of older adults and uses data collected from proprietary wearables, sensors and AI to generate real-time insights about declines in health and wellbeing – and if required, the Umps Link connects users directly to a 24/7 emergency response centre or family caregivers, providing earlier and proactive support at home. According to Breakthrough Victoria, by 2030, there is predicted to be a shortage of more than 100,000 aged care workers in Australia and Umps Link aims to alleviate this shortage in the face of increased demand for care by augmenting existing aged care workers with technology. Designed in collaboration with Victoria’s largest aged care providers, Umps’ products are already offered across Australia under the Home Care Package Program, Commonwealth Home Support Program and NDIS – programs that support more than 1.5 million Australians.
The ACTU claims a surge in collective bargaining empowered by the Albanese government’s overhaul of industrial relations laws is behind the first growth in union membership after more than a decade of decline. More than 1.6 million workers were members of a union in their main job as of August 2024, according to bi-annual Australian Bureau of Statistics data released on Monday, an increase of almost 200,000 in the past two years. Union membership as a proportion of the total workforce rose to 13%– the first time it has increased since 2011 and has lifted membership from its record low of 12.5% in 2022. The reversal in membership decline follows Labor passing some of the most sweeping industrial relations reforms in more than a decade, including new union delegate rights, industry-level bargaining, and powers to force employers to the negotiating table. But Australian Industry Group chief executive Innes Willox said it was “entirely unclear” if the growth was “simply a reflection of the growth of the public sector itself under this government” because the ABS did not release a breakdown of union membership in the public and private sectors.
And in a week when the RBA kept rates on hold at 4.35% but left the door open for a rate cut in February, Woolworths has told investors that a near-three-week strike at its distribution centres will cost the supermarket giant at least $140 million in lost sales and higher costs, with the company warning the full financial hit is not yet clear. It’s still counting! Woolworths and the United Workers Union, which represents employees at the company’s warehouses, reached a deal on Saturday to end 17 days of industrial action at four distribution centres in Victoria and NSW. Woolworths told investors that it expected earnings to fall by about $60 million once extra transport costs and other one-off expenses were included. The industrial action has capped a difficult year for Woolworths, which is facing allegations by the competition regulator that it has misled customers with fake discounts in its supermarkets. Woolworths and Coles are also at the centre of an Australian Competition and Consumer Commission inquiry into how they set prices and interact with suppliers, some of whom say they are being poorly treated. Woolworths has agreed to an 11% pay rise over three years for the 1500 staff at the four distribution centres, an offer that is substantially the same as before the industrial action. The union had sought a rise in pay of at least 25% over three years. It also wanted changes to Woolworths’ productivity framework that threatened to discipline workers if they did not work fast enough. To end the strike, the company has agreed not to performance manage workers if they are performing at the best of their abilities.
More than 30% of the workforce could be disrupted by the rapid uptake of artificial intelligence over the next five years without policy intervention, says a new report that warns that the sclerotic Australian economy was poorly equipped to deal with the next industrial shock. It also warns that Australia risked being left behind all other OECD countries because of the structural nature of an economy geared heavily towards raw material exports and lacking high value industries. While the government recently released voluntary standards for the safety of AI, including 10 proposed guard rails, the report said the Australian economy more broadly was not geared to adapt to the rapid changes. “While the first lay-offs begin in routine data entry, admin and retail, AI will proceed to replace many high-income, knowledge-based positions traditionally considered aspirational and secure,” the scathing report said. “We already see this starting to unfold. The model finds Australia will be one of the worst-hit OECD countries. Australia’s economy is a composite of raw primary exports, low-yield domestic consumption services and high-income-generating professional services constructed for an Australian market. As a developed economy, Australia ranks among the lowest on the industrial complexity index, leaving us dependent on the knowledge economy and on retail and hospitality services to fuel employment. Without immediate intervention, Australia is at risk of large-scale job redundancies within the next five years. While lay-offs from AI will be global, Australia’s economic structure is uniquely ill-suited to absorb the shock or to capitalise on the potential productivity gains of artificial intelligence.” Chief executive of the Australian Industry Group Innes Willox says successive governments have failed to grasp the consequences of the AI revolution, the pace of its adoption and the potential impact of on the workforce. The modelling report conducted by the Social Policy Group, of which Mr Willox is also chair, presented a bleak view of the workforce impacts of AI, beginning with low-income jobs before quickly moving to high-income workers. It warned of large scale redundancies by the end of the decade under a high adoption rate of AI technology, and assuming a business as usual approach, as the private sector sought to address the nation’s productivity crisis. In a worse-case scenario, without any industry policy or regulatory intervention by government, up to 33% of the workforce could experience disruption to their jobs by 2030. A lesser scenario, based on economic modelling, suggested one in five workers could be affected. Mr Willox said the report painted a worse-case scenario that was “bleak”. Still, there is also scope for AI to be a job creator if the transition was managed well. “What history tells us is that every technical revolution has created more jobs than have been destroyed, and there is no reason to doubt this won’t the case with AI. But the challenge is to get us prepared and ready for it,” Mr Willox said.
This is the last episode of Talking Business for 2024. I want to wish everyone a safe and healthy Christmas and New Year to spend with your families.
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