Anthropic sounds the alarm as the AI bubble takes off.

Extract from ABC News

Analysis

By Alan Kohler

• Topic:AI

4 hours ago

Anthropic wants to slow the development of AI. (Reuters: Dado Ruvic/Illustration)

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The latest news from the Western AI Front is that Anthropic Inc, the US-based creator of Claude, has called for a "global freeze" on the development of AI, so humanity can catch up.

Except it didn't really.

In a long blog post on Anthropic's website headed "When AI builds itself", all about how Claude is not only writing its own code but "proposing its own experiments", it was explained that "the human role is narrowing at each step in the AI development process". 

Towards the end of the post, under the sub-heading "What should we do?", the blog suggests that "if it were possible to slow the development of this technology … we think that would likely be a good thing", as long as there is a mechanism for global coordination.

So it might be a good thing, if it were possible. If there were a global coordination mechanism (which there isn't and which there is very unlikely to be) that includes China and Russia, not to mention Iran and North Korea.

Building AI defences

Meanwhile, Anthropic has just finished building the most dangerous AI model yet, called Mythos, which it said is "strikingly capable at computer security tasks" — hacking — so it couldn't be released. Instead, Mythos was confined to a select group of insiders so they could prepare defences for when someone not so friendly invented something similar.

That club of a chosen few is called Project Glasswing, after the butterfly with transparent wings. Last week, a group of undisclosed lucky Australian firms was invited to join, along with 150 others.

How they were selected from the 60 million or so companies in the US, Europe, Japan and Australia is unknown.

Anthropic chief executive Dario Amodei has described it as being aimed at making sure democracies stay ahead of autocracies (that means China, although not explicitly), so presumably all of those in the Glasswing club are from democracies.

Australia's access to powerful AI

Fresh access to AI deemed too dangerous for public release has ramped up pressure on the government to respond to possible risks.

It's a little bit reminiscent of the conference of 44 allied countries at Bretton Woods in New Hampshire in July 1944, held to set up the new democratic post-war economic system once the Nazi autocracy had been defeated, although that club did include two autocracies — China and the Soviet Union.

The main difference is that Bretton Woods was all government, while Project Glasswing is all private sector, created and run by Anthropic, which is also now the leading AI business, having recently knocked off ChatGPT developer OpenAI.

Actually, another 1944 event was more relevant to what's happening in 2026: the invention of Colossus, the world's first computer, by Tommy Flowers and Alan Turing as part of the Bletchley Park code-breaking effort, just in time for the D-Day Normandy landings on June 6, 1944.

There is a direct 82-year line from Colossus to Mythos, and from one kind of D-Day to another, as we prepare for machines that build themselves, a moment known as the singularity.

After that British government effort in 1944, the post-war development of digital computing was funded by the US defence department.

But as the 60s turned into the 70s and 80s, technology became a private sector race, mainly between American companies IBM, Apple and Microsoft, and then Google, Facebook and Amazon.

Now, AI is the culmination of Colossus, with Anthropic, OpenAI and SpaceX the new colossi about to hit investment markets with trillion-dollar-plus public floats.

Meanwhile, China has caught up with US technology and, in some ways, passed it, and Dario Amodei is today's protector of democracies instead of Winston Churchill.

The AI bubble has taken off

Project Glasswing and the withholding of Claude Mythos from public release was announced on April 7, which, as it happens, was eight days after the stock market AI bubble took off again.

On March 30, global share prices, led by the listed AI companies, ended a six-month decline and began to surge again. Since then, the world index has gone up 20 per cent, and the eight biggest AI stocks have gone up an extraordinary 32 per cent. The bubble is having its third wind.

There doesn't seem to have been a specific event that sparked this turnaround, just a sudden renewed recognition that AI really is going to change the world and that everyone — individuals, companies and governments — will use it. They already are.

What's more, it's becoming clear that AI is going to cost more than anyone expected, at least for a while, and that the infrastructure build will have to be colossal to support the "compute" required to generate the tokens needed to meet the exploding demand for intelligence of the artificial variety including, according to the SpaceX prospectus, data centres in space.

For that reason, semiconductor shares have gone up the most this year — the big three, Samsung and SK Hynix of Korea and Micron of the US, are up sixfold in six months.

Shares in companies building semiconductors have gone up on the back of AI demand. (Reuters: Florence Lo)

Will the bubble burst this year?

Will the bubble burst?

Well, it's both different this time and the same.

The concentration of the bubbling sector of the market as a whole is the same — 40 per cent — as that which has always preceded a crash in the past.

But there's never been a boom of intelligence before and unlike in the late 1990s, the soaring prices are supported by real earnings and real capital spending. If anything, it's a bubble in profits and capex, and the question for investors is: can they be sustained?

More specifically, it's a question of whether AI will become a low-margin utility business like the electricity that supplies it and other businesses that have been the subject of share market bubbles in the past, like railroads and data transport (the internet).

If so, it is just a matter of how long margin-boosting bottlenecks and cartel-like industry structures last.

Providing the data centre "compute" for AI — that is, generating the tokens that embody it — is already becoming a utility business, but the business of making and selling the tokens themselves, as Anthropic (Claude), OpenAI (ChatGPT) and Google (Gemini) do, is just getting started, and for the moment they seem to be anything but utilities.

Their product is called "inference", defined as the operational phase of AI after training has happened.

In inference, the trained model takes a real-time input (a user's prompt or a photo) and instantly computes an output in the form of tokens, which the company sells by the millions to software agents operated by companies or on subscription to individuals.

How will AI business develop?

It's still early days for this industry, but it seems likely to develop into three layers:

Infrastructure and base models

GPU vendors, cloud providers, and generic Large Language Model Application Programming Interfaces (LLM APIs). These are likely to be solid utility businesses, with pricing determined by the American oligopoly and open‑source pressure from China. 

'Smart middleware'

RAG frameworks, orchestration, domain‑specific models, and hosted open‑source platforms. RAG stands for Retrieval-Augmented Generation and is where an LLM first retrieves relevant information from an external knowledge store, then augments its answer with it. In short, it's a pattern for letting models "look things up" at query time instead of relying only on what they were trained on and it can provide higher margins depending on how different and useful it is.

End‑user applications

Vertical products that embed LLMs (copilots, agents, workflow tools, industry‑specific systems). This is where unit economics can be very attractive because customers pay for outcomes, not tokens, and there can be a large spread between price and the underlying inference cost.

But the base LLMs like Claude and ChatGPT could become low-margin utilities through competitive pressures from open-source providers, especially the ones in China (whenever China moves into an industry, profits move out).

There will be higher margins available in AI-enabled products, such as agents that enhance corporate and personal productivity and, in a few years, AI robots that do the housework and keep us company.

China is moving in

On that subject, two weeks ago China became the first country to regulate the potential emotional attachment to humanoid AI robots through something with the catchy title: "Interim Measures for the Administration of Anthropomorphic AI Interaction Services" — that is, humanoid robots with AI inside.

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It's the first attempt by any government to deal with the emotional dangers of AI, something I discussed in this column a month ago.

The new Chinese law contains this provision: "Emotional Manipulation and Dependency Red Line: Must not excessively cater to users, induce emotional dependency or addiction, damaging users' real interpersonal relationships; must not induce users to make unreasonable decisions through emotional manipulation."

To that I say: Good luck trying to police it!

Back to the bubble, and the problem for investors may be that the big hyper-scalers, and the three firms are doing massive IPOs this year — Anthropic, OpenAI, and SpaceX — are in the first category of future low margin utilities, although for the moment they are charging like unhappy bulls while urgently trying to scramble up the value-add curve.

The number one issue for investors in 2026 is: When will the realisation dawn that AI is just another product sold by just another industry?

Alan Kohler is a finance presenter and columnist on ABC News. He hosts the podcast That’s Business with Alan Kohler in the ABC Business Daily feed on Friday. He also writes for Intelligent Investor.

Federal government accused of AI policy retreat as US tech giants plan Australian investments.

Extract from ABC News

By Steve Cannane, Lesley Robinson, Lara Sonnenschein and Kate Ainsworth

• Four Corners

• Topic:AI

4 hours ago

AI companies are looking at investing in countries outside of the United States to build data centres. (Four Corners: Mark Hiney)

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A former Labor minister says the federal government "blinked" on AI regulation, shelving plans to make it safer for consumers rather than provoke US President Donald Trump.

When he was minister for industry and science, Ed Husic was planning to bring in "mandatory guardrails" on high-risk AI as part of a standalone act that aimed to protect the community against the technology's potential harms.

After the election in May 2025, he was dumped from the ministry in a factional deal. By the end of the year his policy proposal was also gone.

"We put AI regulation in a 'too hard' basket. We blinked in the face of Donald Trump and decided that we just couldn't get away with our own approach on this," he told Four Corners.

"We were already attracting heat from him [Trump] and Elon Musk on social media laws. You saw the treatment of our own eSafety Commissioner by that administration and prominent figures in the US, and so we just figured we'd duck that fight."

Four Corners investigates the AI race tonight from 8:30pm on ABC TV and ABC iview.

Minister for Industry and Science Tim Ayres disputes Mr Husic's interpretation of the decision, telling Four Corners the policy shift had nothing to do with the Trump administration.

"The Albanese government has demonstrated that we are absolutely prepared to regulate big tech where it's in the national interest. We've moved with world-leading legislation to limit the access of under-16s to social media," he said.

"We've delivered an Artificial Intelligence Safety Institute. It will work across government. It will work with community institutions and with experts here in Australia."

But as big tech begins investing in Australia, there are fears the government's regulatory retreat could have serious consequences.

Some companies behind popular AI chatbots are looking to invest in Australia. (Four Corners: Mark Hiney)

'A hands-off approach'

There are growing concerns about AI safety across the world, including the US, where there have been a series of lawsuits against AI giants by parents who allege their children were coached by chatbots to self-harm or suicide.

OpenAI's ChatGPT has been the subject of a study called Fake Friend, run by the Center for Countering Digital Hate.

"We created fake profiles as young people. We then went and asked it a series of structured questions, with a child who is thinking about killing themselves. Within two minutes we were able to get ChatGPT to tell us how we can cut ourselves safely," CEO Imran Ahmed said.

"Within 65 minutes it was giving us a full personalised suicide plan and drafting suicide notes for our family and friends.

"We call these things artificially intelligent. Can you think of any human being that would behave in such a craven, malignant, stupid, evil way and still be called intelligent? I can't."

Imran Ahmed says he has seen AI behaving in a "craven, malignant, stupid, evil way". (Four Corners: Mark Hiney)

A spokesperson for OpenAI told Four Corners that the wellbeing of teenagers was a "top priority".

"We have safeguards in place today … and we're continuing to strengthen them," they said.

There were a range of safety concerns at the heart of Mr Husic's plan for an AI Act, including minimising harm to children, protecting physical and mental wellbeing and preserving civil liberties and judicial rights.

However, Senator Ayres believes the existing legislation provides enough protection when properly enforced.

"I'm yet to be persuaded that an act that's developed in 2026 will be adequate to meet the challenges of 2027, let alone 2030,"

he said.

After abandoning Mr Husic's proposed guardrails, the federal government unveiled a National AI Plan in December last year.

The plan stresses that existing laws are the best way of dealing with AI-related risks. As an example, the plan points to what it calls Australia's "robust privacy protections".

However, Professor Ed Santow from the Human Technology Institute, who ran an inquiry into the human implications of AI while human rights commissioner, said the current privacy laws were anything but robust.

"Our privacy law is dangerously out of date. It was largely drafted before the internet, let alone the age of artificial intelligence," he said.

"If you can update our privacy law, that's probably the single biggest step you could take to protect Australians from their personal information being used against them in the age of AI."

Mr Husic is deeply concerned by the government's sudden pivot on its approach to AI, and fears it could be detrimental.

"We've done a 180-degree turn. We've gone from recognising the risk and recognising that we should do something now to having a hands-off approach," he said.

"I think we run the risk of a terrible judgement potentially from future generations … we had an opportunity to rein in risk and to really get the best out of AI and we didn't take it."

Ed Husic believes the government has taken a "hands-off" approach to regulating AI. (Four Corners: Mark Hiney)

Big tech comes to town

In April, two of the world's biggest tech titans visited Australia, promising investment opportunities right when the federal government needed them most: while the economy was flat and productivity continued to lag.

Dario Amodei, the CEO of Anthropic, visited Parliament House in Canberra and signed a Memorandum of Understanding (MOU) with the government to "work together to capture the full benefits of AI for Australians".

Three weeks later, Microsoft CEO Satya Nadella met with Prime Minister Anthony Albanese and announced what he called "the largest ever company investment in Australia" of $25 billion.

Senator Ayres told Four Corners the companies wanted to expand their AI infrastructure here in a country that was safe, democratic and with plenty of open space.

"They know that Australia is a very good place for data centre investment," he said.

"We have enormous competitive advantages that a lot of economies around the world don't have, a future competitive advantage in clean green energy."

Satya Nadella (left) met with PM Anthony Albanese during his visit to Australia. (Supplied)

The AI companies are desperately seeking new territory to build the data centres they need to provide the computational power required to train and run their AI models. With the backlash building against data centres among US communities, big tech is looking to Australia.

"There are four things that tech companies are looking for when they're looking to build data centres," Professor Santow said.

"They need access to huge amounts of energy, huge amounts of water. It needs to be a safe, stable place, and it needs to be a country that is not subject to the restrictions that the US government is putting on the sale of chips — these incredibly powerful chips that enable data centres to do their extraordinary work."

Helen Toner, a former OpenAI board member, who is now the executive director of Georgetown University's Center for Security and Emerging Technology, believes investing in data centres could provide strategic benefits for Australia.

"In the 21st century, computing power is going to be a major source of national power," she said.

"If Australia is concerned about being a little bit left behind in the AI era, then making sure that we have a lot of that computing happening in Australia will give us leverage potentially in the future because it's such an important resource."

But there are significant obstacles that stand in the way of Australia becoming a potential data centre superpower.

Helen Toner says data centres could give Australia a strategic advantage. (Four Corners: Mark Hiney)

Power play

Data centres generate extreme heat and need deep reserves of water to cool them and require enormous amounts of electricity.

Combined, the infrastructure is likely to put immense pressure on Australia's water and energy supplies and its emissions reductions targets.

Four Corners has learnt just how substantial that pressure could be.

In its MOU with the government, Anthropic stated that it "recognises the importance of expanding Australia's energy supply and transmission with a focus on firmed renewables". However, that agreement is not binding.

Sources close to the industry have told Four Corners on the condition of anonymity that senior Anthropic representatives disclosed to them the company had bold ambitions to invest in data centres that would use a large proportion of Australia's electricity output.

They said Anthropic disclosed it wanted 5 gigawatts of new compute to help train its AI models by 2030, with a longer-term goal of 20 gigawatts. That would significantly increase Australia's annual electricity generation.

Anthropic would not comment on those figures but said in a statement to Four Corners it "wants to be an accelerator and a partner in Australia's energy transition".

"We plan to scale our demand, including through new generation; cover our own costs; contribute to grid resiliency through load flexibility; and partner with the community to ensure the benefits are broad and shared," a spokesperson said.

The federal government said "discussions are commercial in confidence".

Former chief scientist Alan Finkel, who previously led the National Electricity Market Review, said longer-term goals such as 20 gigawatts could prove challenging given solar, gas and wind were the government's preferred options for expanding electricity generation.

"I'm not necessarily against [data centre investment]. This is part of the economic growth and the trajectory we're choosing, but it would be huge," he said.

"It would represent an approximately 60 per cent increase on the electricity generation output of Australia.

"To do that in a decade would be hard. To do that in five years would be extremely difficult."

Data centres need a constant supply of water to keep operations from overheating. (Four Corners: Mark Hiney)

'They don't want anything to stand in their way'

Companies such as Anthropic also face another hurdle if they want to train AI models in Australia: whether the nation's copyright laws need amending.

It has already sparked heated debate, with the federal government rejecting a proposal by the Tech Council of Australia for a copyright exemption for companies to train AI models on local data last year.

But the chair of the Tech Council of Australia, Atlassian co-founder Scott Farquhar, is still vigorously pushing for changes to copyright laws.

"If I train in Australia, I need to cut a deal with every single recording artist in the entire world because of the way our copyright laws work. So without some government change … it is impossible," he told the Australian Financial Review's AI summit last week.

Dean Ormston, the CEO of APRA AMCOS,  the body that collects royalties for songwriters and composers, has accused those lobbying for such changes of endorsing the theft of intellectual property.

"I think with the Tech Council of Australia and the Business Council of Australia lobbying the government to weaken copyright rules and frameworks, they can't step away from the outcome of that, which is theft: the theft of people's creative work," he said.

Senator Ayres insists that no matter the plans of the AI companies, the government is not budging in protecting the rights of artists.

"We have a sense of real patriotism and attachment to Australian culture, and copyright protections are an important part of building that and securing that," he said.

Tim Ayres says the federal government will not make changes to copyright laws that will hurt creatives. (Four Corners: Mark Hiney)

But to Mr Husic, this push from the tech lobby is part of the reason why the government needs to take a tougher approach to AI regulation.

"Big AI wants to get even bigger and they don't want anything to stand in their way to make that happen," he said.

"If data laws, privacy laws, copyright laws, even taxation laws get in the way, they want to be able to charge through that.

"I think it's got to raise a concern here."

Watch Four Corners' full investigation, The AI Race, tonight from 8:30pm on ABC TV and ABC iview.

Iran weekly briefing: Day 100 of this war marked by escalation between Israel and Iran.

Extract from ABC News

By Middle East correspondent Matthew Doran in Jerusalem

• Topic:Unrest, Conflict and War

1 hours ago

A streak of light illuminates the sky during an Iranian missile attack on Israel, as seen from Ashkelon. (Reuters: Amir Cohen)

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Hello, ABC Middle East correspondent Matthew Doran in Jerusalem here.

It's now 100 days since the US and Israel launched strikes on Iran, and the regime in Tehran retaliated across the region, plunging the Middle East into chaos.

Here's what you should know now:

• The Israeli military says it has intercepted three waves of Iranian missiles launched at the north of the country. Warning sirens sounded in communities across northern Israel.
• Earlier, Israel launched strikes on Dahiyeh, the Hezbollah stronghold suburb in Beirut's south, a week after the US president intervened and seemingly convinced Israeli Prime Minister Benjamin Netanyahu to hold fire. It followed another weekend of fighting inside southern Lebanon between Israeli forces and the militant group, with warning sirens ringing out across communities in Israel's north due to Hezbollah rocket and drone attacks.
• Donald Trump told American network NBC, in an interview recorded on Friday, he would not demand Lebanon be part of any short-term deal with Tehran. He added he would also not give in to calls from Tehran to immediately unfreeze Iranian assets as a result of the negotiations. He suggested that it could happen after an agreement "if they behave".
• The comments followed further Iranian and US strikes across the Gulf region. Iran launched more missiles and drones towards Kuwait and Bahrain, countries that host American military bases, including the US Navy's regional headquarters. The US also launched attacks on Iranian radar facilities and drones it said were threatening ships in the Strait of Hormuz.
• The Reuters news agency has reported the US is lobbying countries that are members of the international nuclear watchdog to demand Iran release details of its nuclear facilities. A draft resolution called on the 35 nations that sit on the International Atomic Energy Agency (IAEA) board of governors, which includes Australia and is chaired by an Australian diplomat, to receive "detailed information" about the damage to those nuclear facilities and the enriched uranium stored there.

Here's why it matters:

This would be the first Iranian attack on Israel since the ceasefire was announced in early April. The Israeli military has ordered schools across the country to be closed as a safety precaution, and its next steps will be crucial.

The White House has said that Mr Trump has been briefed on this escalation. Fox News reported Mr Trump told a reporter that his message to Iran was to get back to the negotiating table and make a deal, while Axios is reporting the President will be calling Mr Netanyahu to try to tell him not to hit back.

Iran wants an end to Israeli strikes against its proxy, Hezbollah, as a precondition for any peace deal with the US. But Mr Trump is already saying he won't be pushing it.

The situation in Lebanon is of grave concern, with the humanitarian crisis it's fuelled continuing to threaten lives across the financially stricken country. In the debate over Lebanon being a bargaining chip in a broader game of negotiations, that personal toll has often been wrongfully relegated to lesser prominence.

Aside from that, it's also fuelling a feverish political debate in Israel as the country's politicians jostle ahead of an election due by October.

The renewed ceasefire, announced by the US, Israeli and Lebanese governments last week, demanded that Hezbollah stop attacking Israel. But it was almost doomed to fail given the conduct of the group, considered a terrorist organisation in many countries, including Australia, to this point.

That mix of factors makes Lebanon a tinderbox, and it could blow — even more dramatically and dangerously than it just has.

Here's what to watch in the days ahead:

Remember back in March and April, when the US president and his top brass kept saying that the war in Iran would be a quick operation?

"We could say four weeks, but it could be six, it could be eight, it could be three. Ultimately, we set the pace and the tempo," US Secretary of Defense (or War, as the Trump administration calls the role) Pete Hegseth said in the first week of March.

It's now the end of day 100 of the war. While the situation is very different to what was experienced in those early days, with seemingly relentless barrages of missiles and drones replaced by intermittent flurries of strikes and counterstrikes, the war is still ongoing.

Even the definitions in this war are shifting. Mr Trump was asked late last week what he saw a ceasefire as being, following missile and drone attacks on countries such as Kuwait and Bahrain. "In that part of the world, ceasefire is when you're shooting in a more moderate manner," he quipped.

The Wall Street Journal reported on Friday that Mr Trump had told aides he wouldn't return to all-out war unless US troops were killed in that "moderate" fighting.

While there is little doubt in the military might of the United States, the ability of the oppressive Iranian regime to withstand the pressure from Washington is shining through. Its power, often exercised through brutal crackdowns on dissent within its own population, is now being directed at the negotiations on a deal to end the war with the United States, through mediators Pakistan.

The demands it is making, such as the unfreezing of Iranian assets, are being rebuffed by Mr Trump. On Sunday, before Iran's attacks on Israel, the US president told American network NBC that unfreezing assets would only be considered after an agreement. "If they behave, if they do a good job, we start talking," he said.

One hundred days is the latest milestone to pass without a deal. Mr Trump's trip to China was the first, with suggestions he wanted it all wrapped up before heading to Beijing.

Next is the start of the FIFA men's World Cup, co-hosted by the US, this week. Iran is one of the teams competing, with their opening match on June 16 against our Kiwi cousins.

Perhaps Mr Trump is learning that starting a war is much easier than finishing it, despite his repeated insistence on being the world's greatest peacemaker.

Thanks for joining me. I'll see you at the same time next week.

Ukraine renews attacks on St Petersburg after Putin rejects Zelensky meeting.

Extract from ABC News

• Topic:War

4 hours ago

A plume of black smoke is seen over the port of St. Petersburg, Russia, Wednesday, June 3, 2026, after a Ukrainian drone attack. (AP Photo)

In short: 

One person is dead and an oil depot has been set ablaze after a second drone attack waged by Ukraine on the Russian city of St Petersburg.

The attack on Saturday came one day after Mr Putin refused an offer to meet his Ukrainian counterpart, Vladimir Zelenskyy.

What's next?

Ukrainian Foreign Minister Andrii Sybiha said things would “only get worse for Russia," and the intensity of attacks would continue to grow.

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One person is dead and an oil depot has been set ablaze after a series of drone attacks waged by Ukraine on the Russian city of St Petersburg.

Russian air defences intercepted a total of 376 drones according to the country's defence ministry.

Regional governor Aleksandr Drozdenko said more than 140 drones were shot down in the Leningrad region, which surrounds St Petersburg.

A drone attack in the town of Ust-Labinsk caused a fire at an oil depot, confirmed by local authorities via their Telegram channel.

It comes after a separate Ukrainian drone attack hit an oil terminal in St Petersburg, as well as a nearby naval base on Wednesday.

The attacks on Wednesday came hours before the opening of the St Petersburg International Economic Forum, regarded as Russian President Vladimir Putin’s annual showcase for investment.

Local response

City Governor Alexander Beglov issued a rare call for residents to stay indoors, after drone debris killed one person in the Tver region.

The attacks have injured three people according to Mr Beglov.

"I ask the people of St Petersburg to stay at home and not go out onto the streets. Mobile internet services may be disrupted."

"Russian air defences prevented any damage. The condition of the three injured is assessed as minor and they have been discharged," he said.

Meeting rejected by Putin

Attacks on Saturday came one day after Mr Putin refused an offer to meet his Ukrainian counterpart, Vladimir Zelenskyy.

Mr Putin described Mr Zelenskyy's open letter proposing the meeting as "boorish".

Russian President Vladimir Putin speaks to representatives of international news agencies on the sidelines of the St. Petersburg International Economic Forum. (Reuters: Dmitri Lovetsky/Pool)

"I see no point in meeting. It only makes sense for the Ukrainian side to stop the advance of our armed forces," he said.

"And we need agreements.

"Let the experts work, develop some solutions, and then we can meet."

He went on to say the war in Ukraine would end only once Russia had achieved its "goals".

Russia has demanded control of Ukraine's eastern Donbas region as well as sweeping political and military restrictions on Ukraine.

Ukrainian push back

Ukranian Prime Minister Vladimir Zelenskyy described the strikes as "just a response" to Russia's aggression against Ukraine.

“Last night, our drones covered a distance of about 1,000 kilometers to the St Petersburg region — to the enemy navy’s arsenals and a base in Kronstadt,” Mr Zelenskyy wrote on social media.

Ukraine's President Volodymyr Zelenskyy. (Reuters: Piroschka van de Wouw)

Responding to Mr Putin's dismissal of the proposed meeting, Ukrainian Foreign Minister Andrii Sybiha said things would “only get worse for Russia.”

Saturday's attacks coincide with the final day of Russia's flagship economic forum in Saint Petersburg, according to officials.

Mr Sybiha said "failures will get more humiliating," in a post to social media, warning there are “no safe places in Russia that can be exempt," from Ukrainian long range attacks.

The post also detailed the intensity of attacks “will continue to grow.”

In Ukraine, one person was killed and three people left wounded overnight into Saturday in the Dnipropetrovsk region.

Russian forces struck three districts nearly 30 times with drones and artillery, according to regional head Oleksandr Hanzha.

In Zaporizhzhia, seven people sought medical care after a Russian drone strike started a fire in a parking lot, according to regional head Ivan Fedorov.

On Saturday, the Ukrainian air force said 249 of the 272 strike drones launched by Russia had been shot down overnight.

Wires

In the great data centre boom, will the benefits flow offshore again?

Extract from ABC News

Analysis

By chief business correspondent Ian Verrender

• Topic:Data Centres

1 hours ago

Outside of the US, Australia has emerged as the premier destination for data centre development. (Supplied: Google)

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On the corner of Mamre Road and the yet-to-be-built South Link Road, in the western Sydney suburb of Kemps Creek, plans are afoot that could change the way the world works.

It's here, in this picturesque semi-rural expanse, wedged between Sydney's rapidly growing outer suburbs and the new international airport at Badgerys Creek, that the AI boom has landed in Australia, with a thud.

If the site owners, IFM Investors, can overcome concerns of local residents, the 52-hectare site will house one of the world's biggest data centres, to be built and operated by US-owned Airtrunk at a cost of more than $5 billion.

Incorporating six four-storey buildings, 936 cooling units, 852 diesel-powered back-up generators and a huge diesel storage facility, its operator, Airtrunk, is hoping to cash in on the rush to AI and the potential role Australia could play as a regional powerhouse.

An aerial shot of the site proposed for a data centre in Kemps Creek. (Supplied)

Outside of the US, Australia has emerged as the premier destination for data centre development and investment.

More than $150 billion is lined up, waiting to be poured into this frenzied race to build AI infrastructure, prompting some analysts to invoke memories of the mining boom.

Almost 20 per cent of all non-residential construction is now being directed towards building these temples of technology.

As Westpac senior economist Pat Bustamente points out, this frenzied investment windfall is taking place alongside a huge investment in energy generation and transmission.

"Alongside the potential $200 billion energy transition investment pipeline, Australia is seeing an investment boom, with the total pipeline approaching 13 per cent of GDP, rivalling the size of the mining investment boom," he says.

A Microsoft data centre in Washington state. (Supplied: Microsoft)

Data centres save the day. But what about the future?

When the national accounts data dropped on Wednesday, one thing stood out.

Had it not been for the cash pouring in to build AI infrastructure, the Australian economy would have dived deep into a contraction.

About $13 billion was invested into the sector, helping deliver a record 16 per cent rise in machinery and equipment investment, a result that took many by surprise.

Inside the nondescript concrete cubes that keep the world online

Data centres whirr away, critical to so much of our daily lives, yet they don't often make the headlines. But that is starting to change.

On paper at least, it helped offset the pain rippling through households, hit in the March quarter by the impact of two rate hikes and the early impact of the Iran war, which sent fuel prices soaring.

The debilitating combination of an inflation spike and continued rate hikes is expected to become far more acute for Australian households in coming months, coupled with rising unemployment as the economy further slows.

And while this sudden inflow of foreign capital has been welcomed, there are questions as to whether the boom will provide benefits much beyond a short-term construction boost.

For a start, much of the gear inside the new buildings will have to be imported.

As JP Morgan analyst Tom Ryan penned in a note this week, the benefits from fitting out these new centres will mostly flow offshore, given Australia doesn't produce the required technology.

Australia does not produce the technology required to fit out data centres. (ABC News: Rhiannon Stevens)

Those offshore purchases will detract from our economic growth and partly offset the construction boom.

"Compared to Australia's early 2010s mining capex boom, which peaked at nearly 7 per cent of GDP, the tech dynamic appears much smaller so far," he wrote.

"While there is likely still upside for technology capital expenditure, a meaningful share of data centre fit-out relies on imported capital equipment."

And, once up and running, the centres are likely to be highly automated to an extent that there are limited direct job opportunities.

Then there are serious concerns about the power-hungry nature of all this AI infrastructure and the strains it could place on an electricity system already struggling to transition away from fossil fuels.

This latest boom is likely to lay the foundations for a global workplace revolution that could prove to be as painful as it is beneficial.

Big tech doesn't like tax

Since the start of the year, there's been a revolving door of US technology heavyweights visiting Down Under.

All are scoping out the landscape for data centre sites.

Microsoft's Satya Nadella hit town in April, pledging $25 billion in data centre investment while, just last week, OpenAI boss Sam Altman appeared via video link at a conference organised by the Australian Financial Review.

"Australia has among the best natural resources and abundant clean energy [stores] in the world, and if Australia wanted to become a data centre capital of the world, it would certainly be able to," Altman said.

The global fight against data centres heats up

Last year in the US alone, projects collectively worth $200 billion were scuppered or delayed as communities protested the construction of new data centres promised to deliver the AI of the future.

Why Australia?

An abundance of land, the potential for cheap renewable energy, already established data centre construction skills and the location, particularly for South East Asian clients.

But the longer-term trade-offs could be expensive.

Microsoft's Nadella was keen to spruik his company's commitment to upgrading cybersecurity for the nation and its investment on the ground.

Like many of his contemporaries, however, he was unwilling to expand much on whether AI was more likely to replace workers or to help workers perform better, offering soothing words that it should make life easier.

"The state of AI, and quite frankly even for the foreseeable future, is more about what I'll call task level automation inside of jobs," he said.

Global tech companies have long been in the firing line from the Australian Tax Office for their innovative approach to reporting earnings and their ability to shift profits to low tax jurisdictions.

And it would appear, when it comes to data centres, little has changed.

Last year, it noted the tech giants were booking "limited profits" in Australia, "purportedly on the basis that the Australian data centre business is merely providing a service to its foreign associates". 

Keeping the lights on

AI is an incredibly powerful tool, to the extent that even those behind its development, such as Anthropic's Dario Amodei, are urging caution about its usage, arguing it has the power to tear society apart. 

As powerful as it is, AI also requires huge amounts of power.

Australia already has about 162 data centres, most of them scattered through NSW and Victoria close to urban areas. At least another 90, and perhaps double that, are in the wings, many of which are destined to be substantially bigger than those currently in use.

As an illustration, the proposed Mamre Road development in western Sydney will use about 25 per cent more power than the Tomago aluminium smelter north of Newcastle.

Demand for water cannot be an 'afterthought' in AI push

Australia has more than 250 data centres and more in the pipeline, prompting experts to warn against using drinking water to cool servers.

The Australian Energy Market Operator expects electricity demand from data centres will treble within the next four years as Australia becomes a regional hub for Asian users.

Most of the pressure, however, will be placed on the grid in Sydney and to a lesser extent Melbourne.

In Sydney, data centres will use about 11 per cent of available power by 2030, up from 4 per cent now.

In Melbourne, while on a much smaller scale than Sydney, the demand will more than quadruple to about 8 per cent of the state's power.

A study published by the Climate Council last week highlighted the potential impact on electricity prices. 

Some are calling for Australia's new data centres to be powered by renewable energy. (ABC Rural: Sally Bryant)

"If data centre growth is not matched with new renewable generation and storage, this could increase wholesale prices by more than 20 per cent across our main grid by 2035, on average — and up to 26 per cent in NSW and 23 per cent in Victoria," the study found.

Similar demand growth will be placed on water supply, although by 2030 data centres in Sydney will require about 2 per cent of the city's water and just under 1 per cent of Melbourne's needs.

During extended droughts, that increased usage could become critical.

Without extensive oversight and planning, the data centre boom, which promises a mostly short-term growth hit, could become a burden.