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Labour markets in NSW and Victoria are among the first to show signs of being reshaped by artificial intelligence, accounting for the vast majority of new jobs using the emerging technology in Australia.

As the federal government considers how to regulate the technology, Australia’s first AI human capital index showed the country’s two biggest states accounted for 76 per cent of new AI jobs, despite having 57 per cent of the overall workforce.

There were 756 jobs ads across Australia that referenced AI skills in 2012. By 2021, there were 20,505.Credit: Stephen Kiprillis

Amid the rapid acceleration of AI applications such as ChatGPT, the federal government last month outlined plans to regulate the use of the technology.

The new research by economics advisory firm Mandala Partners showed private sector investment in AI was growing, with banks, consultancies and accounting firms leading the way. The federal government, Commonwealth Bank, Deloitte, Amazon and Macquarie Bank were employing the most workers with skills in the technology.

But the study revealed a gap between different states and industries in the development of the technology.

NSW, Victoria and the ACT were outperforming on the development of the technology, while Queensland and WA were below expected baselines.

NSW accounted for 49 per cent of AI jobs and Victoria had 27 per cent, while Queensland and WA each had 8 per cent of AI-related workers.

The study measured job advertisements over the past decade to identify which industries and organisations were seeking skills in artificial intelligence, and compared the results with overall labour force figures for each state.

Mandala Partners managing partner Amit Singh said investment in AI needed to be encouraged across the country so that the productivity gains and benefits from the technology are more evenly spread.

“This is not just a technology for people in Sydney and Melbourne,” he said. “It is also for farmers, doctors, miners, teachers in regional Australia. It’s for all of us.”

The research also showed large firms were competing for AI talent with the Commonwealth public service.

The federal government posted at least 2728 AI job advertisements over the past seven years, followed by the Commonwealth Bank on 1739, Deloitte on 1287, Amazon on 1077, Macquarie Bank on 983, and the NSW government on 867.

As AI has moved from theory to practice, investment had moved from universities to the private sector in Australia, the research found.

In 2012, there were 756 jobs advertised referencing AI skills, while in 2021 there were 20,505.

A decade ago, investment was dominated by universities and sectors like financial services and mining. But then over the next five years, professional services and technology firms ramped up their investment to provide AI services to their clients.

Over the past year, firms in other industries like logistics and manufacturing had begun to invest in AI capabilities.

The professional services industry now has the most AI jobs, followed by financial services, education and then IT and media.

The research also highlighted a sharp downturn in AI jobs being advertised during last year’s tech layoffs, but that had since been reversed.

“It’s clear that more and more roles need AI skills,” Singh said.

“This is not new, it’s been happening for 10 years. But what is new is that after the tech downturn, the AI skills trend is accelerating again.”

The government has begun consultations with industry and AI experts as it formulates a new policy for regulating the technology.

A spokesman for Industry and Science Minister, Ed Husic, said the government wanted to see the benefits of AI maximised while mitigating risks.

“The government is in the midst of consultations with industry and other stakeholders about the appropriate regulation of AI to this end,” the spokesman said.

“Further steps will be outlined when submissions have been considered.”

Opposition science spokesman Paul Fletcher said the new study showed there was strong demand for people with AI skills across the economy.

“Of course we need to be alive to potential risks and whether our regulatory frameworks need updating,” he said.

“But the bigger challenge when it comes to AI is making sure that Australia does not fall behind globally in this competitive field.

“Australia produces fewer than 200 PhDs a year in AI; we need to build the number of skilled AI professionals.”

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