Australia ageing (dis)gracefully, a diesel disaster looming & AI at the Chook lunch

Chanticleer

The episode explores significant economic and structural shifts facing Australia, from leadership changes at the AFR to long-term growth pro

Key takeaways

• James Chesil is stepping down as AFR Editor-in-Chief, with Cosima Mariner set to take over.
• An OpenAI agent breached Australian public health data firewalls, raising concerns about AI safety and regulation.

Main topics

• AFR Leadership Transition
• OpenAI Security Breach

Notable quotes

The hidden engine of the global economy.

Conclusion

The episode highlights a period of intense transition where productivi

Transcript preview

Speaker 4 (0:04) The Speaker 2 (0:04) Australian Financial Review. Speaker 4 (0:08) Hello, I'm James Thompson, Senior Chanticleer Columnist at the AFR. Welcome to our weekly news breakdown of all things business, finance and markets. Speaker 4 (0:18) With me today, as always, is my Chanticleer colleague. He's got the soul of a boomer, the heart of a Gen Xer, and the stamina of a millennial. It's the intergenerational wonder, Anthony McDonald. How are you, Anthony? Still kicking, James. Survived a big week. Fantastic. Speaker 4 (0:37) Well, this week we look at why the next 40 years could be tougher for investors, businesses and politicians. We take you inside this week's special chook lunch to learn the secrets of an AI pioneer. And we extract the big lessons from Australia's great AI hack. Speaker 4 (0:56) Okay, Anthony, before we get to the big news of the week, we've had a bit of big news ourselves here at the Financial Review. James Chesil, the AFR's Editor-in-Chief and frequent guest on the Chanticleer podcast, we should say, is stepping down after a brilliant but too brief... stint in charge, and he'll be handing the reins to his second-in-command, Cosima Mariner, who's also been a frequent guest on the podcast, and congrats to Cosima. Anthony, do you think it was her brilliant appearances on the podcast that might have sealed the deal for her? Speaker 3 (1:25) Oh, I have no doubt, James. I mean, my brother called this morning just to say, oh, you know, how are you going? How's your week been? I said, look, pretty eventful. James out, Cosmo in. And he was like, Cosi, she's great. Only because he's heard on the podcast. Oh, there you go. Look, Ray Jean change in a newspaper, it's always a big thing. Probably any organization, you know, this is like our version of a CEO change, editor-in-chief. I mean, their job's really powerful. It sets the tone. Everything filters down from the top. James has gone after two years and two months. You know, sad to see from a personal and professional standpoint. Totally. You know, known him a long time, we're close. But I mean, Cosma, we got her coming in. Number two steps up to number one. She's got great energy, ideas, experience. She'll give it a red hot crack. Anyone who listened to her on the podcast heard her enthusiasm and energy. That's what we'll be looking to get Speaker 4 (2:10) behind. Congrats to both James and Cozzy. We've loved working with James and we look forward to many more appearances from Cozzy on the pod. We'll get her in once she gets her feet under the desk. Totally. Now, Speaker 3 (2:19) James, back to the real world. And on Thursday, Anthony Albanese, who has spent the week in the US as part of a trip to attend the United Nations General Assembly, he made a shock revelation. We'd been hacked by OpenAI. Yes, a bot went bad, got into some public health data it shouldn't have, and Albo had to issue a please explain to OpenAI boss Sam. Altman. James, there was no great harm done, but this really has brought all this sort of AI safety stuff home, Speaker 4 (2:47) hasn't it? Yeah, I think there was no great harm done this time, Anthony. I think that's the big caveat here. I mean, there are some funny things about this hack. It's not funny, but the detail I love the most is that... OpenAI's agent was apparently doing some health research. They asked it a question about Australia. It started looking on Australian health websites, came up against the sort of firewall, wouldn't take no for an answer, according to Albo, and managed to breach the firewall and get into some places it shouldn't. OpenAI, did they get on the hotline to Anthony Albanese? Is there a bat phone they picked up? No, they just send an email to, I don't know, info at servicesaustralia.gov.au or whatever it is. I mean, how many of us have sent an email to one of those sort of public inboxes that you know no one's ever going to look at? I wonder if OpenAI was doing that. You know, should we call Elbow? No, just send an email and maybe they won't notice. It'll be fine. I'm with you, Anthony. I think this is a bit of a thin edge of the wedge type moment. A, it says that OpenAI can't control its own bots. That worries me. Yep. B, it says that... you know, open AI's bots have no problems hacking friendly governments. That worries me. And then I think it comes back to this bigger question, which we talked about on the pod last week. Do we need to put safety guardrails around AI and slow down the development? Ironically, the day before Albo revealed this hack, he was talking about that exact topic at the United Nations. And incidents like this will build the momentum for some sort of AI slowdown, some sort of guardrails. I know Donald Trump doesn't want that, but the rest of the the world seems to want it. And the financial implications of that slowdown are serious. If we see the frontier labs forced to put on the brakes, then they'll put on the brakes on spending. That'll flow through to the hyperscalers. That'll flow through to the data center boom. That'll flow through to the huge earnings boost that we've had from AI on the share market. This does have implications, and I think it's got financial implications. I don't know. Am I connecting too many dots, Anthony? Who's the dummy here though, Speaker 3 (4:52) James? Is it us for having flimsy firewalls or is it the Ape and AI for its bots getting out of control? Oh, good question. I don't know. A little from Speaker 4 (5:01) column A, a little from column B. Speaker 3 (5:02) Yeah, I just wonder how that phone call went between the Prime Minister and Sam Altman. Do you reckon Sam answered the phone and he was like, were you the melons guy? Mate, I don't know. I'm scratching my head over this one, James. There's a lot going on. The way it all went down, you know, it happens in... June 18, I think. OpenAOA becomes aware in August. So, you know, only six weeks later, you know, reports it in September and then takes about, you know, 10 days to work its way up to the top and something to happen. I just don't know whether the alarm bells were ringing on this one or everyone was a bit confused or what, but it doesn't seem like there was any sort of wartime reaction to it. So, I mean, did they know that the information that the bot had got was public sort of information and not damaging? Or were they confused by it all? Or were they trying to verify this email? There's so much going on. Yeah. Speaker 4 (5:52) There's Speaker 3 (5:52) a Speaker 4 (5:52) question mark. Will OpenAI or Anthropic ever list on the share market? About $5 trillion Australian dollars is tied up in their valuations. There is a theory that these guys will never be able to list because of this liability issue. Everybody's going to be hacked at some stage by an open AI or anthropic agent, whether it's in open AI or anthropics control. I mean, that seems to be where this is going. And who's liable? Who do we sue? If some person, some young bloke or young woman from Western Sydney or Western Melbourne had hacked to the Medicare website, they'd be up on charges. They'd probably be in jail as we speak. Open AI? I don't know. Sam gets a nasty call or maybe we just flick off an email to the inbox. I don't know. There's hairs on this, and I think this is a bit of a moment that we'll be talking about for a long time. Anthony, the other thing we're watching, apart from AI, very closely at the moment is oil. And I've got a bit obsessed with diesel prices in the last little while too. Don't drive a diesel car, but diesel is really important to the way the whole world moves. Every commodity is basically diesel and dirt at some level. Diesel prices hit record levels in the US and Europe. They're climbing sharply here, and it's all getting a little bit disorderly in the diesel market. Why does diesel matter so much, and what's the underlying problem that's sort of coming on top of this energy shock we've got? Well, this week I saw it called Speaker 3 (7:14) the hidden engine of the global economy. Ooh, I like that. I thought that was a really apt description. Yeah. You know, passenger cars run on petrol or gasoline, as they call it in the US mainly, but just about everything else, everything bigger, you know, your trucks, ships. I mean, diesel's at the heart of that. And I mean, the reason why we care about that is diesel costs up. That's just the cost of everything pretty much go up. I mean, food's the obvious one. I wouldn't have thought there's too much on Coles or Woolworths shelves that hasn't had a bit of diesel involved in getting it to the customer, James. So, you know, we think about this as a cost story, a sticky inflation story to time when that's already a problem. for us. In terms of the diesel itself, Speaker 2 (7:52) I Speaker 3 (7:52) mean, wholesale prices have gone up so much because of the ongoing disruptions in the Strait of Hormuz. I mean, still suffering from heavy delays, targeted attacks, you know, refinery damage in the Middle East. There's just sort of like a shortening of supply. I mean, at the same time, stocks globally are getting more depleted. There's more concern that this war will go for even longer. So people are trying to refill those stocks that have maybe depleted over the past. 209 days since the war broke out. We had a pretty interesting story from Ryan Cropp in Canberra this week, James. Not sure if you saw it about Australia's diesel stockpile here. He said it's down about 20 % in the past two months. So it's still up a little bit on where it was when the war started, but since August, we've been chipping into it. So I mean, if we try and get back to where it was in August, we're going to be buying more. That sends the price up even more. In Australia, we're reasonably fortunate because As one of the wealthier countries in the world, we have been able to afford to pay more for oil, more for diesel, fuel, et cetera, to beef up our supplies in reaction to what's going on. But it's Speaker 4 (8:54) a Speaker 3 (8:54) big story and worried about it. because, as we said, it's the hidden engine of the global economy. I Speaker 4 (8:59) like that, Anthony. That's very, dare I say, that's very James Thompson hyperbole there. The other problem with diesel is refining capacity. So there's just not enough refining capacity around the world. Basically, these refineries, most of which are in America, Europe, Asia, they're running at 100%. Oil refineries are... really delicate machines. They can't run at 100 % for a long period without needing maintenance or something going wrong. We're starting to see that happen as well. So I don't think this problem gets better, even if the Strata for Moose opens today. So just watch this one. It really bears close attention over the next few months. I think Anthony Albanese is going to be talking a lot more about diesel between now and Christmas. Yeah, good point. Okay, Anthony, let's move to our first topic. And this week, we got the latest update on where Australia is heading over the next 40 years in the form of the Intergenerational Report from Treasury. It's more than 300 pages. And look, it's a fascinating document that outlines six big challenges for Australia over the next four decades. They're the things you'd normally think about. The AI revolution, geopolitical fragmentation, the energy transition, Australia's industrial transition, the ageing population, of course, and intergenerational inequality. Now, Anthony, they're all big, worthy topics, but there was one number that stood out for the AFR, I think, and that's that growth in the next 40 years is going to be about 2 % a year compared to 3 %