Jim Chalmers spruiks data centre boom as sign of private sector taking the wheel

Treasurer Jim Chalmers has seized on a splurge of business spending into data centres as evidence the private sector is driving Australia’s economy.

The tech cash splash helped push business investment up 10.5 per cent in the year to March — the strongest number in nearly five years.

Yet the impact was muted as most of the highly-complex equipment must be imported from overseas.

Government spending plateaued amid expert warnings that taxpayers had been propping up economic activity at levels not seen in decades.

“Despite all the doomsayers and everyone who wants to talk the Australian economy down, we’re seeing a boom in private investment and that’s a good thing,” Dr Chalmers said.

“By seeing these investment figures flow through into our economy, that will be an important part of shifting what has been a couple of decades now of poor performance on productivity.”

He said capital spending had increased six times faster than analysts had expected.

It comes amid hot debate about the looming impact of artificial intelligence on society with assistant treasurer Andrew Leigh warning in a May speech that artificial intelligence was on a list of existential threats.

Economists are also debating the benefits of a big build-out in data centres that UBS’s George Tharenou estimates was worth about $2 of every $100 spent in the country across the past three months.

Westpac’s Pat Bustamante said “the big story in the quarter was investment in data centres”.

“We estimate that the net effect of this investment, including spillover effects, drove all the growth this quarter,” he said.

“Outside of this, investment and economic activity were weak, with the pick‑up in household consumption offset by a fall in public demand.”