{"id":731118,"date":"2026-06-12T04:42:18","date_gmt":"2026-06-12T04:42:18","guid":{"rendered":"https:\/\/www.newsbeep.com\/au\/731118\/"},"modified":"2026-06-12T04:42:18","modified_gmt":"2026-06-12T04:42:18","slug":"were-spending-bucket-loads-on-the-thing-that-could-kill-us-heres-why","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/au\/731118\/","title":{"rendered":"We\u2019re spending bucket loads on the thing that could kill us. Here\u2019s why"},"content":{"rendered":"

June 12, 2026 \u2014 11:55am<\/p>\n

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After years of hearing about sluggish business investment \u2013 and how it\u2019s a big reason we struggle to lift our living standards \u2013 you would think the recent surge would be a good thing.<\/p>\n

And in many ways, it is. The most recent \u201cnational accounts\u201d \u2013 a set of data gathered and shared every three months by the Australian Bureau of Statistics \u2013 showed business investment was the largest contributor to economic growth in the three months to March.<\/p>\n

\"InvestmentInvestment in data centres is spurring economic growth but also potentially spinning us closer to disaster.Bloomberg<\/p>\n

Business investment is spending by private businesses on things such as machinery and equipment, and is important for growing the economy but also for increasing how much we all share in that growth.<\/p>\n

Generally, when businesses invest in things that help us do our work more easily, it means we use fewer of our scarce resources (be they ingredients, material or time we spend working) to supply goods and services. That helps us become better off on average because we can have more of what we want and need.<\/p>\n

Related Article\"Warsh<\/a><\/p>\n

Over the March quarter<\/a>, private investment grew 3.6 per cent and the economy grew 0.3 per cent. The biggest driver? Business investment in machinery and equipment (up 16 per cent), largely made up of data centres across NSW and Victoria<\/a>.<\/p>\n

These are the engine room for modern websites, cloud applications and AI platforms, and as artificial intelligence has exploded in popularity, we\u2019ve needed more of them to meet demand.<\/p>\n

But data centres also come at a cost.<\/p>\n

Most people, for example, know about the huge amount of water and energy guzzled up by these facilities. By 2030, the Australian Energy Market Operator reckons data centres will need as much electricity as all the households in Victoria.<\/p>\n

Earlier this week, Dr Andrew Charlton, the assistant minister for science and technology, said in a speech that data centres would be forced to wind down power use<\/a> at peak times to prevent blackouts or strain on the grid, and that their owners would be required to build enough energy supply to power their operations (which could also then be accessed by households when those data centres aren\u2019t in full force).<\/p>\n

But as the government\u2019s other economics expert, Dr Andrew Leigh, the assistant minister for productivity, competition and treasury, pointed out in a speech last month, there are even more consequential risks we aren\u2019t paying enough attention to.<\/p>\n

\"AssistantAssistant minister Andrew Charlton said data centres would be forced to wind down power use at peak times to prevent blackouts or strain on the grid.Louise Kennerley<\/p>\n

As economists \u2013 and students of economics \u2013 many of us are familiar with concepts such as economic growth: what it\u2019s made up of, what drives it and what might cause a slowdown.<\/p>\n

The biggest part of the economy<\/a>, by far, is households: their spending makes up more than half of Australia\u2019s gross domestic product. While they weren\u2019t the biggest driver of growth in the most recent quarter, consumption by households contributed 0.3 of a percentage point to growth in the three months to March, meaning they were the difference between an economy with sluggish but positive growth or no growth at all.<\/p>\n

While higher interest rates dampened households\u2019 appetite to splash out<\/a> on \u201cnice to have\u201d things such as restaurant meals and alcohol, Australians did spend nearly 12 per cent more on essentials such as electricity, gas and other fuels (not because they suddenly needed more energy, but because of the end of a series of electricity rebates).<\/p>\n

The role of government spending, meanwhile, took a back seat as state governments stopped spending on things such as electricity rebates.<\/p>\n

\"AssistantAssistant minister Andrew Leigh has warned that AI could lead to extinction.Alex Ellinghausen<\/p>\n

While investment spending by government, businesses and individuals contributes to the country\u2019s GDP, the amount this adds to economic growth depends partly on whether that money is spent on imported goods or those made domestically.<\/p>\n

Why? Because the equation for calculating gross domestic product includes \u201cnet trade\u201d: exports minus imports. When we import goods and services, they get subtracted in the formula because they haven\u2019t been produced in Australia.<\/p>\n

So, a lot of that growth in investment spending on imported equipment and machinery for data centres, for example, doesn\u2019t actually boost our economic growth by as much as we might think at first glance. Sure, business investment might jump, but some of that effect is offset by the fact it\u2019s imported from overseas.<\/p>\n

Related Article\"Focusing<\/a><\/p>\n

Now, that\u2019s not the thing that might kill us. Trade is generally a good thing that helps us swap the things we\u2019re better than other countries at making (or doing) with things that they are better at pumping out: a win-win.<\/p>\n

The big risk is linked to what our big jump in investment spending on AI tells us about our priorities, and where those priorities might lead us.<\/p>\n

As Leigh points out, the planet has gone through extinction several times in the past: ice ages wiped out entire species and the dinosaurs were probably wiped out by a giant asteroid.<\/p>\n

But today, the biggest risks to human existence are actually made by us: nuclear weapons, climate change and deadly diseases engineered by people. Increasingly, AI has become a threat, too \u2013 and not necessarily because it\u2019s evil.<\/p>\n

We might think that as long as we give AI clear guidelines as to what we want (and don\u2019t want), we\u2019ll be OK.<\/p>\n

\"TheThe reason we\u2019re not putting the brakes on AI development can be explained using economics.Bloomberg<\/p>\n

But just because we give AI clear instructions, it doesn\u2019t mean it will get them right, or follow them in a way that actually aligns with our interests. An AI that has been given a specific task, for example, might, in its quest to complete that request, trample over everything else that we failed to consider.<\/p>\n

The concern, as Leigh puts it, is not simply that a model makes mistakes. \u201cIt is that a highly capable model may pursue the wrong goal in a clever, coherent, persistent, and hard-to-reverse way,\u201d he says.<\/p>\n

Even an AI system with the fairly innocent goal of making paperclips could, in its efforts to maximise its objective, find it useful to hoover up resources, resist shutdown, and manipulate its environment in ways that might be destructive to our other interests.<\/p>\n

Related Article\"Xi<\/a><\/p>\n

And given we\u2019re already prone to making mistakes, the possibility of us unintentionally (or intentionally) creating an AI with misaligned goals is more likely than us getting it completely right.<\/p>\n

The worst outcome, from a human-centred perspective, is that we get completely wiped out<\/a>.<\/p>\n

The reason economists don\u2019t often think about disastrous scenarios like this is that standard tools of economics aren\u2019t great at considering risks that are hard to put a price on, outcomes that can\u2019t be compared against a familiar range, or low-probability events of enormous scale (especially when the probabilities themselves are uncertain).<\/p>\n

Yet, the reason we\u2019re not putting the brakes on AI development can be explained using economics.<\/p>\n

Related Article\"The<\/a><\/p>\n

There\u2019s the free-rider problem, for example. If even one country took a step back and strengthened guardrails around AI, every other country would benefit from the boost in safety. But it\u2019s one of those situations where everyone hopes someone else will pay the price for safer AI practices, and no one wants to pay for something that someone else will benefit from.<\/p>\n

Meanwhile, because AI also comes with potentially huge profits and advantages, countries have more to gain from investing heavily in (potentially destructive) AI than in technologies that reduce the odds of catastrophe. The immediate rewards on offer for charging ahead with developing AI are high, while the immediate, monetary rewards of developing technology to contain it are fairly low.<\/p>\n

And when it comes to governments, even though preventing our extinction seems a worthwhile cause, investing in things like AI guardrails and monitoring don\u2019t benefit them much. Why? Because the benefit \u2013 averting disaster \u2013 is invisible and hard to prove: better to wait for a disaster to happen and come to rescue once the threats are visible.<\/p>\n

Finally, it\u2019s not something most of us probably think about too deeply because the individual benefit we get from learning deeply about existential risk is tiny: individually, there\u2019s not much any of us can do about big issues such as AI.<\/p>\n

But at the risk of sounding a little too apocalyptic, as we invest more into the technology, it\u2019s worth us trying to put more thought and money behind not just boosting prosperity and economic growth, but about making sure we have an economy to talk about \u2013 and exist in \u2013 at all.<\/p>\n

The Market Recap newsletter is a wrap of the day\u2019s trading. Get it each weekday afternoon<\/a>.<\/p>\n

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\"MillieMillie Muroi<\/a> is the economics writer at The Sydney Morning Herald and The Age. She was formerly an economics correspondent based in Canberra\u2019s Press Gallery and the banking writer based in Sydney.Connect via X<\/a> or email<\/a>.From our partners<\/p>\n","protected":false},"excerpt":{"rendered":"June 12, 2026 \u2014 11:55am Save You have reached your maximum number of saved items. Remove items from…\n","protected":false},"author":2,"featured_media":731119,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[64,63,99,164],"class_list":["post-731118","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-au","tag-australia","tag-business","tag-economy"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/731118","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=731118"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/731118\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/731119"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=731118"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=731118"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=731118"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}