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ESSENTIALS

— Parliamentary Committee investigates who picks up AI’s tab

— Can Coalition cut migration without fueling inflation?

— Julie Inman Grant to gather global tech regulators

DRIVING THE DAY

AI PROMISES PRODUCTIVITY GAINS. ITS HIDDEN COSTS ARE SPREADING

Federal Parliament’s artificial intelligence inquiry continues today in Sydney, with evidence from data centers, data vendors, AI safety institutes and one of Australia’s most powerful unions, the SDA retail workers union.

Some evidence will show that while AI promises productivity gains, it also pushes costs around the economy, including onto workers, courts, infrastructure and other businesses.

The first AI job losses may not look like job losses: Why? Because it’s freelance gigs getting cut and they’re easy to hide.

There’s strange blockages in the economy: Like a data center building slowdown in the U.S. because of a shortage of specialist railcars. Three of the more surprising economic impacts of AI, outlined in submissions to the Australia inquiry are:

— AI could make legal advice cheaper and courts more expensive.

— It could make retail operations more efficient day-to-day while increasing workers compensation and sick leave claims over the long-term.

— Data center builders are competing with the struggling residential housing market for electricians, electricity and water.

Read the full story by Ryan Heath.

TUESDAY’S HEARING PITTED RIGHTS-HOLDERS AGAINST AI COMPANIES, who want access to copyrighted material to train their models.

OpenAI chief strategy officer Jason Kwon described its unauthorized access of Medicare statistical data in Australia as “not super sophisticated,” encouraging greater use of AI to shore up cybersecurity defenses as the antidote to risks. He also reiterated OpenAI’s apology for unauthorized access to Australian government websites, and supported mandatory incident reporting.

Deep dive: Kwon said the review into unauthorized actions by OpenAI’s agents is working through 50 petabytes of data, which would take a human 66 million years with no breaks to do. OpenAI now spends more than 10% of its computing power on AI safety.

Mood in the room: Polite. There are strong incentives on both sides to acknowledge the severity of the incident but ultimately draw a line under it. Australia wants AI investment and access to models to boost its cybersecurity defenses, and AI companies want to invest in a country that is a trusted U.S. ally.

Paul Karp followed all the action.

AWARDS

SMART COOKIES

— Liberal frontbencher Andrew Hastie for demanding OpenAI’s 60-second elevator pitch for Australians who don’t understand AI.

Their answer: Breakthroughs in health care, scientific research and economic growth.

— Independent MP Kate Chaney for extracting answers on how to react to the threat of AI-propelled bioweapons.

Their answer: Engage with frontier labs, and gene synthesis screening laws like California.

— Labor MP Tim Watts for asking for OpenAI’s “red lines” before investing in a country.

Their answer: Available land and resources, buy-in from local communities, clear legal regime allowing AI training (i.e., copyright exceptions).

FALLING FLAT (WHITE)

— Labor MP Zaneta Mascarenhas didn’t commit to this zinger, and it failed. We still don’t know what she was getting at: Watch.

— Labor Sen. Josh Dolega complained to OpenAI’s American executives about the planning permission practices of Firmus, an Australian company building data centers in Tasmania. Unsurprisingly, they hadn’t heard of it, though OpenAI has agreed to buy computing power from Firmus.

COALITION’S IMMIGRATION SHOCK THERAPY

Catch me up: The Coalition went big and bold in its immigration policy. Instead of easing numbers down, the plan is to abseil them off a cliff. It’s not quite in One Nation’s “net negative” numbers, but it does require ditching 700,000 temporary visa holders, including by cutting whole visa categories and halving the refugee intake.

The cuts are dramatic, and so are the economic trade-offs.

Productivity cold turkey: Deputy Liberal Leader Jane Hume told News24’s Andrew Clennell we’re in a per capita recession already.

“Rather than having productivity drive economic growth, which is the only sustainable way to deliver real wages, it’s population growth that’s driving any GDP,” and she argued the best way to fix that is “cutting the temporary migration program, but maintaining the permanent program and increasing skilled migration.”

THE BIG QUESTIONS:

— Will voters care if the Coalition tries to out-One Nation One Nation?

— Will this sort of economic shock create higher wages (by constraining labor supply), but also years of higher inflation and higher interest rates?

— How does construction operate, given the sector needs 90,000 more workers?

THE BIG HEADLINES — NO ESCAPING THE ONE NATION FRAME

The Sydney Morning Herald — “Taylor enters three-way migration battle.”

ABC — “Coalition promises deep cuts as it enters migration fight with One Nation and Labor.”

The Australian — “How Coalition plan stacks up against One Nation on migration.”

The Australian Financial Review— “Biggest migration cut in history won’t hurt the economy, Taylor says.”

The Guardian — “Angus Taylor vows biggest cut to migration in Australia’s history, slashing 650,000 temporary visas.”

THE BIG BEASTS

Property Council: “A big bucket of cold water on business and service levels across Australia.”

ACCI boss Andrew McKellar: “If you have the largest single cut in migration in Australia’s history, that is going to take our economic growth potential backwards. There’s no two ways of skirting around that reality.”

Universities Australia CEO Luke Sheehy: Makes “Australia less competitive for talented students and graduates at precisely the time we need more skilled people contributing.”

Former Immigration Secretary Mike Pezzullo: “Required to get that stock [of temporary visa holders] back to the longer-term trend.”

REALITY CHECKS

Is this the biggest immigration cut in Australian history? Debatable. Both Covid-19 cuts (a 98% drop in net numbers from around 200,000 to 3,300 in 2020), and the White Australia Policy, which ruled most of the world out of entering Australia, are contenders.

“Budget neutral” is not cost-free: The statistical gymnastics of the narrow budget claim assumes an extra 60,000 skilled workers can replace the tax payments of 700,000 others (who pay GST, fuel excise and other taxes, and many of them income tax, too). It will also take a lot of rapid yet thoughtful AI adoption to seamlessly suck hundreds of thousands of workers out of an economy.

THE ODDITIES

— Surge pricing for migration! Welcome to the posh backpacker era. You escape rising visa fees only if you agree to work in the country.

— Discount on refugees! 50% off the refugee intake, except for when we expand it in an emergency.

— The migration headcount is shrinking, the press conference headcount was exploding: Why did this policy need a committee to present it?

— Alliteration academy: Is there some kind of competition in the Coalition party room? We got a temporary time-out for “toxic taxes” Tuesday, but the Coalition leadership assaulted us with:

Angus Taylor demanding “A home, not a hotel.” Jonno Duniam delivering a “red light to radicals,” and Matt Canavan taking gold by promising “a country, not a campground,” alongside “borders, not booking.com” and referencing Martin Parkinson as “hardly a populist provocateur.”

COMPARING THE PARTIES: ABC’s Jake Evans has this handy compare and contrast.

THE PLAYBOOK INTERVIEW

JULIE INMAN GRANT — ON HOW TECH REGULATORS ARE GOING GLOBAL

Inman Grant, Australia’s eSafety commissioner, is the regulator in charge of the country’s world-leading under 16 social media account ban. Paul Karp caught up with Inman Grant in her Sydney office.

This interview has been edited for length and clarity.

You’ve previously said the under 16 social media account ban is a very blunt instrument, has your view of it changed?

Before there was a social media minimum-age legislation, I talked about the challenges of trying to regulate the entire internet or all of social media. I brought forward this water analogy: We have pools in the backyard, fences are required and they’re backed with enforcement. But we still teach our kids to swim and we still supervise them. This is what I saw was akin to sort of fencing the ocean.

I knew it would be hard and I knew that the social media companies would be loath to comply because they’ve largely reached saturation point with adults, and a big focus of their revenue streams is on getting younger and newer users on board. We saw companies more focused on lobbying other capitals around the world than they were getting their own house in order to build the tools that they need to comply.

The Australian government argues the ban has prompted a conversation about the right age to be on social media. Is that the right metric of success?

Well, of course, I do think this is a normative and cultural change. And one of the things I said on Dec. 10 last year at Kirribilli House was that this was not going to be an overnight success. That there would be resistance from the platforms.

The goal isn’t keeping kids off social media, it is providing safe haven for them until these platforms are safer to work on.

I’ve been focused very much on safety-by-design, but the platforms that our kids are inhabiting today are not safe. So to me, it does make sense that we try and delay their exposure to harmful and deceptive design features that are there to keep them hooked, that are opaque. They can’t see [them], they can’t fight against.

Last week you warned of mounting evidence of a broader range of AI harms, what are they?

Well, we’re dealing with AI harms every day, as it is, including deepfaked image-based abuse synthetic child sexual abuse material. But we’ve found that overseas criminals and terrorists tend to be early adopters of AI. And they don’t have the same compliance responsibilities that the rest of us have. Targeting Australian young men, they’re using face-swapping technologies and voice-cloning technologies. We’re seeing those in online scams as well.

There’s some really scary things around obliteration of open source models where the safety guard rails can be stripped out. There’s a group that we work with called Tech Against Terrorism that has just demonstrated that some of these safety conditions in AI can be taken out and could help terrorist groups create bombs.

What is the extent of international cooperation on these issues?

Well, this will be an exclusive for you. We were the first and only online safety regulator for the first seven years. So when we understood that Ireland, and the U.K., and Fiji, and others were creating similar independent regulators, we formed a group called the Global Online Safety Regulators Network and we launched that in late 2022, and we’re the original co-chair. We are actually hosting the senior officials meeting of the Global Online Safety Regulators Group in late November.

So we have close working relationships with all of our fellow regulators. When you think about the stealth, the wealth and the power of these technology companies, we really need to band together to really counter some of that and make sure that we’re learning from each other.

CANBERRA MEETS WORLD

OCT> 7: “Three years after the Hamas gunshots rang out across southern Israel, the world is still living in the October 7 era,” Matthew Knott writes in this piece on the third anniversary of Hamas’ attacks, and how it changed Israel, Gaza and Australia.

Israel’s ambassador to Australia says the third anniversary of Oct. 7 is an opportunity for both countries to return to “traditional friendship,” The Guardian reported.

IN THE DARK: A power outage forced independent MP Zali Steggall’s panel at pre-COP to proceed without lights, reports The Australian’s Rosie Lewis in Fiji.

On the shoulders of giants: Reminds us of the time the lights went out on a 2007 Kevin Rudd press conference spruiking … solar energy in a solar-powered school classroom.

WHILE YOU WERE SLEEPING

EU — 50 LAWMAKERS TARGETED BY DEEPFAKE PORN: Fifty European Union lawmakers, including 46 women — 1 in every 6 — have been the targets of deepfake pornography, according to new research.

SPAIN — VOX POPS OFF, AS FAR RIGHT EYES ITS CHANCE: Spanish Prime Minister Pedro Sánchez calling an early election Nov. 29 opens the door for the return of the Spanish far right.

Voter unrest over sky-rocketing housing costs won’t easily channel into more Socialist votes: He’s been in power since 2018 without successfully addressing affordability concerns.

The center-right People’s Party are ahead in the polls and the far-right Vox party is in third..

The most likely outcome is a PP/Vox coalition, with PP leader Alberto Núñez Feijóo installed as a center-right prime minister propped up in the Spanish parliament by Vox. That would be the first government foothold for the far right since General Franco in 1975.

The far right has also made hay with the migration crisis, which enveloped the Spanish enclave of Ceuta this summer, and left Sánchez awkwardly positioned as a pro-immigration anti-Trump.

What’s next: The continent’s political makeup could look very different this time next year after elections in four of the five biggest EU countries. France, Italy and Poland are also voting.

FRANCE — MARINE LE PEN’S BUDGET PLAN: The far-right leader proposes a “golden rule” to cap national debt at 60 per cent of GDP (half current levels) that voters would have to approve through a referendum, and to reduce the public deficit each year by 0.5 percent to reach “close to a balanced budget.” This mirrors Germany’s now discredited “debt brake,” ditched last year as the country raced to increase defense spending.

Why all the fuss? Bond market vigilantes have been betting against France’s economy, putting the country on the edge of a sovereign debt crisis. One of the reasons is they’re betting Le Pen can win the 2027 presidential election, and they are keenly aware that for decades she has championed free-spending policies to protect working-class voters.

“Le Pen is betting her economic credibility on this moment, after trying to rebrand herself as a fiscal hawk over the past few weeks,” per POLITICO’s chief Europe correspondent, Marion Solletty.

AGENDA ASSISTANT

Founder of Go Gentle Australia Andrew Denton will address the National Press Club from 12:30 p.m. on voluntary assisted dying and how to address barriers to access over the next decade.

Assistant Productivity Minister Andrew Leigh and Father Paolo Benanti will address the National Press Club on AI and ethics from 5 p.m. Benanti is an Italian Franciscan friar who has served as an adviser to Pope Francis.

Department of Parliamentary Services Secretary Jaala Hinchcliffe will speak at the Canberra Region Tourism Advisory Forum from 9 a.m. The interim vice-chancellor and president of the Australian National University, Rebekah Brown, is also speaking.

Senior officials including Home Affairs Deputy Secretary Hamish Hansford, Australian Cyber Security Centre head Stephanie Crowe and National Cyber Security Coordinator Michelle McGuinness will speak at a forum on protective security in Canberra.

LOCAL CANBERRA

BILL MAKES HIS MARK: University of Canberra Vice-Chancellor Bill Shorten has signed off on a deal allowing casuals to earn 17% superannuation — in line with permanent staff — by January 2030, Ewin Hannan reported.

COMMUNITY CORNER

HAPPY NATIONAL BANANA DAY: We interrupt your regular Playbook programming with this message because Ryan is a Coffs Harbour native, and because Olivia Dean celebrated by brandishing a glittery banana during her concerts in Melbourne this week.

Olivia Dean wields a banana on stage in concert at Melbourne's Rod Laver Arena. | Ryan Heath

SPOTTED: Housing Minister Clare O’Neil flying economy to Canberra, and lining up with everyone in Groups 4 to 6 to board the plane.

PSA FOR THE APS: The Economic Society of Australia is hosting a conference on AI in economics at the Department of Finance on Nov. 6. Registration is free for all APS economists.

MOVES AND APPOINTMENTS

HIRED: Former ACT Greens leader Shane Rattenbury is the new chief executive officer of Lifeline Canberra.

SA Police Commissioner Grant Stevens will become the state’s governor general this morning.

HIRING: Labor Sen. Deb O’Neill wants a new electorate officer based in Parliament House.

BIRTHDAYS

Liberal Sen. Kerrynne Liddle, Gonski report author David Gonski, Australian Republican Movement founding chair Thomas Keneally, Russian President Vladimir Putin.

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AI promises productivity gains. Its hidden costs are spreading