Labor's dilemma is that Australia needs two things voters fear

analysis The economy needs migration and data centres. Voters hate both The two things holding up the economy are fast becoming the two most potent and dangerous political issues confronting the federal government. Data centres and migration are the twin issues the government needs to keep pumping to keep the country in positive economic territory, but they are also the two issues voters have the most complex and hostile relationship with. It presents a dilemma for the government: can't live with it but also can't live without it. Migration has long been a key contributor to the economy, with international students, workers and their spending helping tip dollars into treasury coffers. One Nation and the Coalition want to drastically cut immigration and are smashing the government on the idea that they have allowed a "mass migration" program. Labor, stung by months of relentless campaigning on this issue, finally unveiled a plan to try to cut it back too. But figures out today's Intergenerational Report (IGR) show just how much we need migrants for the economy to keep growing — albeit slowly. Australia's population growth is projected to slow from an average of 1.4 per cent a year over the past 40 years to 0.9 per cent a year over the next 40 years. This is 0.2 percentage points lower growth compared with the projection period of the 2023 IGR. The population is projected to reach 39.3 million by 2065–66. In 2062–63, the projected population is 1.8 million lower than projected in the 2023 IGR (Chart 8.2). So while politicians from all the major, minor and yet-to-be-determined sides launch into a debate around migration, the projections are blunt — we are failing to build our own population from our own numbers. Migrants are the ones renewing us whether we like it or not. The data centre conundrum And while migration is the perennial political headache for the government, data centres present the same bargain — an economic boost at an unknown political cost. Touted as the next boom, with some figures indicating they could deliver around $150 billion by 2030. For a country that has relied on revenue from selling the things we dig up, data centres have looked like the next pot of gold. With inflation still high and economists predicting the Reserve Bank will deliver another rate rise this month, the government will be desperately relying on investment returns from both. That both issues are currently the subject of furious debate not just in Canberra but across the country is inconvenient — to put it lightly. Huawei, the Chinese-owned tech giant that was in 2018 banned from being involved in Australia's 5G rollout, released a report a few days ago that predicted data centres could consume up to 10 per cent of the world's electricity by 2035. The figure is staggering. Australia is trying to thread the needle: the government's proposed standards would force new centres to generate their own renewable energy and minimise water use to offset their demand. But those standards are yet to become law. Meanwhile, increasingly dystopian stories about the toll the centres are taking on power, water and the grid are emerging from the United States. While migration is well-traversed political ground, the emergence of data centres and the community hostility is new territory. The PM wants to build public consensus through national standards, but it is fanciful to think that laws will contain voters' anger if people think they are having to compete with global big tech firms for water and power. Anthropic has signed an agreement to use part of a $32 billion data centre proposed for a site on Queensland's Western Downs. It is set to be the largest facility in Australia and would draw as much power as about 1.5 million average households. AI questions won't disappear Not afraid of calling a spade a spade, Labor MP Ed Husic says the government has so far had a "patronising" approach to people's concerns about artificial intelligence implementation. "I'm still concerned that we don't have a uniform approach to dealing with the risks of AI," Husic told Afternoon Briefing. "I've seen AI firms, in fact, some operating right here out of Canberra that are developing generative AI products that are way cheaper than what you're seeing out of US tech [companies]," he said. But Husic said he did not think Australia would back itself to go local, pointing to leaked Treasury advice "that says we should just be the quickest at adapting someone else's technology". "That massively undermines our ambition and capability and ability to scale up our own local solutions, and I've got to say, if you want to build confidence in AI, people knowing homegrown AI is available for them that can meet the job and give them a lot more confidence. "I am concerned that we are dragging the chain. The best thing, if we want to have AI sorted out, is to get a national approach and get it done once, get it done right." This is a wicked problem for Labor. Anthony Albanese has urged the United States and China, the two leading powers in the AI race, to strike a deal that ensures "humans remain in control". He has also left the door open to changing copyright laws in a bid to attract AI investment in Australia. Albanese will be speaking with like-minded leaders at the United Nations General Assembly about global rules to regulate the development of AI, and while significant, those discussions won't fix the domestic concerns over AI. The government needs to find a way to show voters that they won't be left footing the bill for these new futuristic centres and the cash that comes with them, otherwise the public will keep just getting angrier. Without a reckoning on not just data centres, but also migration — the two streams the government is banking on to sustain the economy will become two of the government's biggest liabilities. Patricia Karvelas is host of ABC News Afternoon Briefing at 4pm weekdays on ABC News Channel, co-host of the weekly Party Room podcast with Fran Kelly and host of politics and news podcast Politics Now. Loading