AI is the opposite of a painkiller … at least for now

August 15, 2026 — 5:00am

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A lot of the fear – and excitement – around AI is based on an assumption that it will be effective and rapid … like a good painkiller.

People scared of mass job losses, for example, assume AI will – quite soon – be good enough to take over our jobs. And many of those excited about the possibility of kicking back and relaxing (or raking in a lot of profit) by putting AI to work also assume it’s a fast-moving, formidable beast.

Perhaps most promisingly, for anyone who has been listening to economists’ cries about Australian productivity stagnating and prices stubbornly rising, AI is like a knight in shining armour: one that might be able to yank us out of our predicament.

Because here’s the thing: if AI can help us cut costs or slash the time we spend on making things or providing services, it could bring down the costs of production, and therefore the prices we pay for these things. AI could also help slow down price growth by making it easier for businesses to increase supply, bringing it closer in line with demand, and therefore reducing price pressures.

These things would ease our cost-of-living crisis and improve our standard of living. It seems, at least, like AI could be the answer to some of our biggest economic problems.

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Stephen BartholomeuszSenior business columnist

Senior business columnist

But like a lot of “silver bullets”, it’s not quite as simple as we might think. And there’s likely to be some economic growing pains before we see any potential benefits.

The Reserve Bank pointed out this week, as it has for many weeks now, that our inflationary woes come from a combination of things (including global oil shocks and conflicts over which we have little to no control) but that, fundamentally, it’s because of an imbalance between supply and demand in the Australian economy (some of which we do have control over).

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© The Sydney Morning Herald