Australian Treasury Warns AI Data Center Boom May Raise Interest Rates

The Australian Treasury warns that a surge in AI-related data center construction could drive up interest rates as tech companies and governments compete for limited labor, concrete, and copper. Analysis prepared for the federal intergenerational report estimates the domestic data center boom could be worth $150 billion, or 5% of GDP, by 2030.

While the Treasury views AI adoption as crucial to achieving a forecasted 1.2% productivity growth over the next decade, it cautions that the economy remains vulnerable. Potential negative growth shocks could be triggered by AI-enabled cyberattacks on critical infrastructure or a correction in inflated tech share prices.

In response to these economic shifts, the Australian government is pursuing strategic partnerships to secure AI sovereignty. Defence Minister Richard Marles traveled to the United States to negotiate a $21 billion deal to attract the AI firm Anthropic to Australia. Treasurer Jim Chalmers emphasized that securing this sovereignty is necessary to improve national living standards.