Sydney's professional heartland is set to be reshaped by artificial intelligence, with new analysis showing workers in the city's inner suburbs face the highest exposure to automation in Australia. More than 45 per cent of tasks performed by employees in the City of Sydney and North Sydney council areas are vulnerable, according to a report by SGS Economics and Planning. The report also found 44.5 per cent of tasks in the City of Melbourne exposed to AI automation.
The report, released on Monday, marks a departure from previous waves of economic disruption. Past shifts, particularly the automation and outsourcing of manufacturing in the 1980s and 1990s, hit employment in outer suburbs and regional areas hardest. This time, city-based employees in finance, professional services, technology and business services are most likely to see their jobs change due to AI.
Co-author Alison Holloway said the effects would have a "different spatial pattern". "Earlier waves of automation took on routine, manual tasks, so their effects were felt most in manufacturing suburbs and farming regions. AI can now take on parts of the cognitive work done in offices, and those jobs are concentrated in the professional heart of our cities," she said.
The analysis measured the exposure of work tasks to AI automation, not the probability of jobs disappearing altogether. Exposure declines with distance from Sydney's central business district. In The Hills Shire it falls to around 40 per cent, and in Hawkesbury Council to 35 per cent. Other urban areas with relatively high shares include Adelaide City (43 per cent), the City of Perth (43 per cent), the ACT (41 per cent) and Brisbane City (40 per cent).
Federal Employment and Workplace Relations Minister Amanda Rishworth said there is no evidence of widespread AI-driven disruption to Australia's labour market so far. "Workers need to have confidence that by adopting AI, they are not just training their own replacement," she said. She said the government is promoting safe AI adoption and the AI Employment and Workplaces Forum, created earlier this year, has brought together government, employers and unions.
A spokesperson for the NSW government said AI will bring "opportunities and changes". The spokesperson said the state established an Office of AI this year to help monitor and respond to the impacts.
Jeremy Gill, head of policy at the Committee for Sydney, said the findings do not mean people living and working in areas at risk of high levels of AI automation will have their jobs replaced, but that the skills workers need will change. He stressed the importance of preparing new graduates and supporting workers with a decade or more left in their careers. Many hands-on jobs in manufacturing, health care and construction are likely to prove more resilient, he said.
In regional NSW, Newcastle (38 per cent), Wollongong (37 per cent), Albury (37 per cent) and Armidale (37 per cent) recorded relatively high shares. Holloway said policy measures may be required to ensure the economic benefits of AI adoption are distributed.
Analysis
Why This Matters
- The report maps the geographic footprint of the next automation wave, which is concentrating in the professional centres of major cities rather than the manufacturing regions hit in previous decades.
- It raises questions about how the economic gains from AI will be distributed, and whether targeted retraining programs need to shift focus from factory workers to knowledge workers.
- The data provides a foundation for policy responses from federal and state governments, both of which have recently established forums and offices to address AI's workplace impacts.
Background
For a century, automation has changed work on farms and in factories. The past 30 years saw the manufacturing sector's share of economic output fall steadily as industrial robots and low-cost overseas competition reshaped the economy. This previous wave of disruption hurt outer suburbs and regional areas, leading to a range of government support programs. The current SGS analysis suggests the economic geography of disruption is shifting to city centres, where cognitive, knowledge-based work is concentrated.
Key Perspectives
Alison Holloway, SGS Economics and Planning: The pattern is different this time. "Earlier waves of automation took on routine, manual tasks, so their effects were felt most in manufacturing suburbs and farming regions. AI can now take on parts of the cognitive work done in offices, and those jobs are concentrated in the professional heart of our cities," she said. She questioned who will benefit from the productivity uplift.
Amanda Rishworth, Federal Employment and Workplace Relations Minister: There is no evidence of broad upheaval yet. The government is promoting "safe AI adoption" and closely monitoring the labour market.
Jeremy Gill, Committee for Sydney: Job replacement is not inevitable, but task and skill changes are. Support for new graduates and mid-career workers is crucial to prevent them being left behind.
NSW Government Spokesperson: AI brings "opportunities and changes". The Office of AI will help ensure benefits are enjoyed by the many, not just the few.
What to Watch
- Whether slowing employment growth in GenAI-exposed occupations, noted by the Office of the Chief Economist in July, accelerates into a broader trend that triggers formal government intervention.
- The development of retraining programs specifically targeting knowledge workers in inner cities, reflecting a shift from the manufacturing-focused support of the past.
- How the AI Employment and Workplaces Forum translates its discussions into practical protections or guidelines for workers.
Checked
12 claims in this story checked against 1 source: 12 supported.
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- SupportedThe AI exposure map shows inner-city workers as the most exposed in Australia.The Age - Latest News: “workers in the city’s inner suburbs more exposed to artificial intelligence-driven disruption than anywhere else in Australia”
- SupportedMore than 45 per cent of tasks in the City of Sydney and North Sydney council areas are vulnerable to AI automation.The Age - Latest News: “More than 45 per cent of the tasks performed by employees in City of Sydney and North Sydney council areas are vulnerable to AI automation”
- SupportedThe City of Melbourne has 44.5 per cent of tasks exposed to AI automation.The Age - Latest News: “especially the City of Melbourne (44.5 per cent)”
- SupportedThe report says Sydney’s professional heartland is set to be reshaped by automation.The Age - Latest News: “Sydney’s professional heartland is set to be reshaped by automation”
- SupportedThe report was released on Monday.The Age - Latest News: “The SGS Economics and Planning report, released on Monday”
- SupportedPast automation and outsourcing of manufacturing in the 1980s and 1990s hit employment in outer suburbs and regional areas hardest.The Age - Latest News: “the automation and outsourcing of manufacturing activities in the 1980s and 1990s, which hit employment in outer suburbs and regional areas hardest”
- SupportedThe report says city-based employees in finance, professional services, technology and business services are most likely to see their jobs change due to AI.The Age - Latest News: “The report by consultancy SGS Economics and Planning found city-based employees in finance, professional services, technology and business services are most likely to see their jobs change due to AI.”
- SupportedAlison Holloway said AI’s effects would have a “different spatial pattern”.The Age - Latest News: “Alison Holloway, a partner at SGS Economics and Planning and the report’s co-author, said the effects of AI automation would have a “different spatial pattern””
- SupportedThe analysis measures exposure of work tasks to AI automation, not the probability that jobs will disappear altogether.The Age - Latest News: “The analysis measured the exposure to AI automation of work tasks, not the probability of jobs disappearing altogether.”
- SupportedAmanda Rishworth said there is no evidence so far of widespread AI-driven disruption to Australia’s labour market.The Age - Latest News: “Federal Employment and Workplace Relations Minister Amanda Rishworth told this masthead there is no evidence, so far, of widespread AI-driven disruption to Australia’s labour market.”
- SupportedRishworth said, “Workers need to have confidence that by adopting AI, they are not just training their own replacement”.The Age - Latest News: ““Workers need to have confidence that by adopting AI, they are not just training their own replacement,” she said.”
- SupportedThe AI Employment and Workplaces Forum was created earlier this year and brought together government, employers and unions.The Age - Latest News: “the AI Employment and Workplaces Forum, created earlier this year, had brought together government, employers and unions to discuss AI’s opportunities and challenges”
