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Australia faces the prospect of becoming an “extractive” economy for artificial intelligence, where much of the productivity value generated by AI flows to overseas technology companies rather than being retained domestically, according to Dr Sue Keay, Director of the UNSW AI Institute.
Speaking on UNSW’s Engineering the Future podcast, Dr Keay argues that while AI has the potential to transform Australia’s productivity and living standards, the country’s reliance on imported AI tools from a small number of US-based companies poses a long-term economic risk.
Productivity And Living Standards
Dr Keay draws a direct line between productivity growth and the quality of life Australians experience, arguing that AI may be critical to sustaining improvements in both.
“Productivity can be directly linked to our standards of living. And so typically if you start to see productivity stagnating, then that can influence how much we can afford to buy from other countries and generally how comfortable we feel with the wage that we’re all receiving,” Dr Keay explains.
She points out that there are limits to how much productivity can be improved through labour alone, noting that most historical gains have come through technology rather than people working harder.
“There’s a limit to how much you can improve a country’s productivity just through labour productivity alone, because I’m sure people probably don’t feel that they can work that much harder than they currently are,” she notes. “The main way that we’ve seen a lot of productivity improvements in the past has been related to technological advances.”
AI As A Productivity Tool
Dr Keay identifies AI as the next phase of that technology-driven shift, with applications spanning automation of repetitive work, improved efficiency and decision-making support at scale.
She also flags the potential for AI to address labour shortages in sectors where it is difficult to recruit.
“The opportunity with artificial intelligence is that both at an individual level and at a company and governmental level, they can be applied across a whole range of functions,” Dr Keay outlines. “If you can start to scale a lot of those solutions and in particular areas where we find it difficult to find people to do work, then that’s obviously an advantage.”
She warns that standing still is not an option.
“It really isn’t an option for us to just bury our heads in the sand and hope that this technological change won’t impact on us. We have to figure out how we can harness the benefits,” she adds.
The Risk Of An “Extractive” AI Economy
While the productivity opportunity is significant, Dr Keay raises concerns about where the economic value of AI adoption actually ends up. She argues that AI, more than previous technological shifts, is concentrated in the hands of a small number of global companies, most of which are based outside Australia.
“Artificial intelligence, probably more than any other transformation in the past, has the very high potential for being an extractive industry,” Dr Keay warns. “The people who are leading the development of these tools and making all of the profits from them are not Australian companies.”
She points to the tax arrangements of major technology companies as a compounding factor.
“We are purchasing most of our artificial intelligence, particularly from the US, and yet those companies we know tend to pay very little tax here in Australia,” Dr Keay continues. “That will have devastating consequences unless we find ways to either develop alternatives, and really invest in Australian AI as a competitive advantage to make sure that we are generating Australian tax-paying companies to support our workforce.”
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Data Sovereignty As A Strategic Priority
Dr Keay also identifies control over data as a critical factor in determining whether Australia can capture the benefits of AI domestically.
“If we have more control of our data, then that lends itself for us to be able to build our own AI-specific models that are beneficial to us and not necessarily to anyone else,” she argues.
She frames the issue in terms of national agency, pushing back against what she describes as an unchallenged flow of data and value out of the country.
“We have to stop unquestionably accepting that this kind of one-way flow of information, which is very extractive, is actually acceptable,” Dr Keay states. “We can’t be powerless or give up our agency to other countries unless we’re prepared to potentially lose our sovereignty.”
Last Updated on May 19, 2026 by Nick Ross
