The rollout of artificial intelligence across the Australian economy could lead to a $116 billion boost over the next decade and create more than 40,000 jobs, according to new research from consulting firm EY.

The analysis estimates the potential impact of AI by modelling productivity gains across different occupations and tracing how those gains could flow through to industries, investment, employment and whole-of-economy growth.

EY modelled three scenarios: a base case reflecting its central estimate of AI-driven productivity gains; a low scenario where gains are 10 per cent lower, and a high scenario case where they are 10 per cent higher.

Across these scenarios, AI could add between $95 billion and $116 billion to Australia’s economy over the next decade, increasing real GDP by between 2.6 per cent and 3.2 per cent by 2036.

The modelling also suggests AI could create between 36,000 and 44,000 additional jobs by 2036, although the benefits will not be evenly distributed.

Some sectors are expected to expand as AI drives investment and demand, while others could require fewer workers.

Huge economic potential

The economic upside is dependent on businesses converting AI-driven productivity gains into higher investment, capacity and output.

EY estimates that AI could deliver a 2 per cent to 2.4 per cent boost to productivity, generating between $31 billion and $38 billion in additional investment over the next decade.

“The analysis shows that if AI-driven productivity gains flow through to investment, capacity and output, they could deliver a meaningful lift to economic growth,” EY regional chief economist, Oceania, Cherelle Murphy said.

“Construction is expected to see the largest increase in full-time jobs as AI adoption lifts demand for new capital, equipment, systems and infrastructure, including the data centres and supporting infrastructure needed to enable the technology,” Murphy said.

The shift will not be uniform across the economy, however, with some capital-intensive industries expected to require fewer workers as AI boosts productivity.

“The jobs story is not one of AI simply replacing workers across the economy.

“The modelling shows employment demand shifting toward sectors that benefit from stronger investment and household spending, while capital-intensive industries need fewer workers.”

Boosting productivity

EY said AI could help address Australia’s long-running productivity problems – but only if businesses successfully implement the technology.

“Productivity is the main driver of long-term economic expansion and improvements in living standards, but Australia’s performance has been weak over the past decade,” Murphy said.

“Labour productivity growth has averaged just 0.3 per cent a year over the past 10 years, less than a quarter of the rate recorded in the previous decade.

“That is why the potential productivity uplift from AI matters, not just as a technology story, but as an economic growth story.”

To capitalise on the potential of AI and see new jobs created, Australia will need to focus on upskilling and retraining.

“Realising the economic benefits of AI will depend critically on workforce mobility and targeted reskilling,” Murphy said.

“A key priority for employers and government should be helping workers move into the sectors and parts of businesses where demand is expected to grow.”